Phillips 66 Savings Plan

Diversification

Diversification can be an important safeguard in investing. The idea is simple: You avoid putting all your eggs in one basket. Instead, you build your portfolio with different types of assets. When one type of investment is doing poorly, another may be doing well. This may help prevent dramatic swings in your account balance. Keep in mind that you also may diversify your company stock holdings as explained in the Diversification Notice. Diversification does not ensure a profit or protect against a loss.

While there's no one-size-fits-all answer when it comes to diversification, finding the right asset mix doesn't have to be complicated.

Complete Vanguard's Investor Questionnaire for a suggested asset mix.

Playing It Safe Can Leave You Short
On the surface, short-term reserves—such as your 401(k) plan's money market fund—appear to be no-risk options because they seek to maintain a steady value. But many people overlook their hidden risk: inflation.

Over time, inflation can greatly reduce the returns you receive. Here's how: Over the past three-quarters of a century, short-term reserves have earned an average annual return of 3.6%. During this time inflation has eaten up about 2.9% of that return each year. With an annual return of just 0.7% after inflation, you may not reach your investment goals.*

While an investment with plenty of high returns and zero risk would be ideal, it just doesn't exist. So you should consider choosing something that balances risk and return. Finding the right balance can be challenging: You don't want a volatile investment portfolio that keeps you up at night, but you need to make sure you accumulate enough money to last throughout your retirement. Because your plan offers a wide range of fund options, you can create a portfolio with just the right combination of risk and potential return to suit your investment style.

All investing is subject to risk, including the possible loss of the money you invest.

*Past performance is not a guarantee of future results. For U.S. short-term reserves, we use the Ibbotson U.S. 30-Day Treasury Bill Index from 1926 to 1977, and the Citigroup 3-Month Treasury Bill Index thereafter. Unlike stocks and bonds, U.S. Treasury bills are guaranteed as to the timely payment of principal and interest. Index performance is not illustrative of any particular investment because you cannot invest in an index.

Source: Vanguard.