Common Cents: Easy Ways To Grow Your Money

I want to respond: "But my two year personal rate of return for the same account has been a little up over 9%, and my year to date personal return is negative 7.7%. Can I least be 30 years old? It's the new 20." Let's talk tips to making your retirement money grow.

Diversification and Asset Allocation

These terms are thrown around constantly and some people might not understand the true meaning of diversifying or what asset allocation looks like. Placing 33% of your 401(k) in large cap funds, 33% in small cap funds and 33% in money market funds is more asset allocation and less diversification.

"The first thing people need to do is get their mix of allocations right, which changes as your time horizon shrinks," says Ritter. A 25-year-olds mix of allocations is different from a 55-year-old's allocation.

Your portfolio should hold stocks and bonds to represent asset allocation, but different types of stocks and bonds, that's diversification.

"Diversification prevents something bad happening to a particular sector of the market from having too big an affect on your portfolio," says Ritter.

Example: Let's say you had 100% of your retirement funds placed in large cap funds, and 80% of your exposure was in the financial sector, if that sector plummets, then the impact to your retirement is more astronomical than someone who has properly balanced their exposure to numerous sectors.

Of course, recently, since the whole market went down, diversification will not necessarily help. BUT, market turmoil tends to be cyclical. If one goes up, the other goes down, and you're exposed to both, then you're balanced.