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Choose an investment strategy

icon treeManaging your own investments can be an overwhelming and time-consuming business, requiring regular monitoring and rebalancing to make sure your investments are meeting your investment objectives.

But, not everyone has the time or desire to be actively involved in managing their investments. That’s why WEA Member Benefits retirement accounts offers you three different investment options.

OPTION 1: One-decision investing: Target Retirement Funds  
OPTION 2: Model portfolios1 
OPTION 3: Hands-on investing 
OPTION 1: One-decision investing: Target Retirement Funds

Simplify your investments.

  • Select your retirement date.
  • Choose the fund nearest your retirement or withdrawal date.
  • Consider the risk associated with your selection.

Although Target Retirement Funds can simplify investment selection, all mutual fund investing is subject to risk. Diversification does not ensure a profit or protect against loss in a declining market. Target Retirement Funds are not guaranteed and may gain or lose value now and after the target date is attained.

If you choose this option, stop here and learn about choosing your beneficiaries.

TRF chart  

OPTION 2: Model portfolios1

If you choose this option, you will complete the Risk Profile Questionnaire as part of the enrollment process.

A model portfolio helps you achieve your personal investment goals by placing you in a pre-defined portfolio based on your age, risk tolerance, and retirement timeline.

Which model portfolio is best for you depends on the results of a risk assessment. Your risk assessment or suitability test tells you which model portfolio may be best for you and your financial goals. If you are young and just starting out, you may want to focus on long-term growth. If you are an investor with retirement on the horizon, you may want a more conservative portfolio.

Members who choose to invest in a model portfolio will need to take the Risk Profile Questionnaire when they initially invest and then again every three years to determine if there are any changes in their risk tolerance and investment goals.

Model portfolio features

  • The investments that make up the model portfolios are selected from the WEA TSA Trust investment platform.
  • Low maintenance.
  • There are no additional fees to invest in a model portfolio.
  • Model portfolios auto-rebalance each year so your investment mix aligns with the model portfolio investment goals.
  • Takes age, risk preference, and your retirement timeline into account.
OPTION 3: Hands-on investing

Manage and monitor your investments.

If you are a do-it-yourself investor, follow these steps:

  1. Review the information below.
  2. Complete the Risk Profile Questionnaire.
  3. Choose the appropriate investment allocation for your risk tolerance.
  4. Select your funds. Use the Investment Worksheet (appears after you take the Risk Profile Questionnaire) as a helpful guide.
  5. Monitor your investment mix.
  6. Rebalance as needed for fund growth or life changes.
  7. We can talk to you about asset allocation and risk tolerance. To obtain guidance, please call an RIS Specialist 1-800-279-4030.

How do I invest my retirement savings?

Asset allocation

Before investing your money, you will want to know what kind of investor you are so that you can select a mix of investment types consistent with your financial situation and your risk tolerance. You can determine which approach fits your style by taking the Risk Profile Questionnaire. After answering 12 questions, your score will suggest an asset allocation appropriate for you. The idea is to find an allocation mix and stick with it. Many experts say that maintaining an asset allocation strategy is more important in the long run than making frequent investment changes. The next step is to choose specific investments that fit your asset allocation.

Picking individual investments

The Investment Worksheet groups your investment choices into the five asset categories used in the suggested portfolios. To start, you may want to write percentages for each category. Then, within each category, you may use one or more investments to fill that percentage allocation.

To help you, fact sheets for the investments are available on our Investment Choices page. You may also view our Investment Spectrum that identifies the investment objective, company size, the role it plays in your portfolio, Morningstar® category, and risk/return trade-off associated with this type of investment.

Size: small, medium, and large

Many mutual funds are set to invest only in companies of a certain size, based on the market value of all of its stock. Morningstar Inc.® groups mutual funds as small-, mid-, or large-cap funds, based on the companies the fund owns. Small companies have a market capitalization, or cap, of generally less than $1 billion. Companies worth from $1 billion to about $10 billion are found in mid-cap funds, while those larger than $10 billion are termed large-cap.

The large-cap companies are usually mature and represent the mainstream of the U.S. economy. In number, they represent fewer than one-quarter of all companies issuing stocks, but in capitalization, they represent nearly three-fourths of the stock market’s value. Small- and mid-cap companies are usually younger, often representing new products, technologies, or sectors of the economy.

Style: growth, value, and blend

stylebox tsaGrowth investing and value investing are terms given to two distinct styles employed by stock fund managers. Instead of selecting companies based just on their size, a fund manager may also look at certain financial characteristics.

An individual company’s earnings, dividends, cash flows, and other ratios determine if it is a value or growth investment. A mutual fund owning financially-similar companies can be termed a value or growth fund. Historically, both growth and value styles have produced similar long-term returns, though each category has periods when it outperforms the other.

Growth funds are a diversified portfolio of stocks that has capital appreciation as its primary goal, with little or no dividend payouts. The portfolio mainly consists of companies with above-average growth that reinvest their earnings into expansion, acquisitions, and/or research and development.

Value funds generally emphasize the stocks of companies from which the market does not expect strong growth and are relatively lower in price. These companies are usually mature, in traditional businesses, and pay dividends.

In general, growth funds appeal to investors who will accept more volatility in hopes of a greater increase in share price, while value funds are appropriate for investors who want some dividend income, but are less tolerant of share price fluctuations.

Some mutual funds are a blend of both styles. By definition, mutual funds that invest in all of the companies of a stock index will own stock of hundreds of similar-sized companies, without regard to value or growth character. As such, they are a blend of value and growth companies and are different than mutual funds that are predominately invested in just one style.

The data that Morningstar Inc.® gathers on individual companies and then translates to the mutual funds that own them provides a convenient framework. Based on the size of the companies a mutual fund owns, it may be called a large-, mid-, or small-cap fund and then a value, blend, or growth style based on financial data. This creates a nine-square table representing the various categories of U.S. stocks.

Other investments

There are mutual funds that may concentrate on a single sector of the economy, regardless of company size or management. The sector may be that of a certain business or geographic region. These funds may use screening criteria to select certain types of companies and exclude others.

International mutual funds include foreign and global funds. Foreign funds invest most of the assets in companies of countries other than the United States, while global mutual funds include U.S. companies as well. Along with the general risks of investing in stocks, foreign stocks also carry added risk, including currency exchanges and political activity. Global and foreign mutual funds are often used to add further diversity to portfolios that also invest in U.S.-based mutual funds.

The Prudential Guaranteed Investment* is not a mutual fund, but an investment contract that guarantees the principal and interest. In an asset allocation mix, our Prudential Guaranteed Investment assumes the role of a fixed-income or bond investment. You may trade dollars in your account among the Prudential Guaranteed Investment and the various mutual funds.

>>Want to know more? Sign up for a free one-hour financial consultation** or for any of our other fee-based financial planning services.***

*Interest is compounded daily to produce a 3.15% yield net of Prudential Retirement Insurance and Annuity Company’s (PRIAC) administrative fee of 0.60%. PRIAC is compensated in connection with this product by deducting an amount for investment expenses and risk from the investment experience of certain assets held in PRIAC’s general account. For more information go to weabenefits.com/pru.

1 Model Performance
The reported performance of the models is hypothetical yet based on actual performance of the underlying mutual funds and their corresponding weightings. The performance data on the underlying funds was derived from Morningstar®, an independent third party. The illustration does not reflect the actual performance of individual investors in the models. Investment models are not FDIC-insured, and they are not bank-guaranteed. Investment models may lose value. Past performance is no guarantee of future results. Model performance returns illustrate the relationship between risk and reward. The WEA Member Benefits model portfolios are risk-based. The more conservative the underlying asset weightings are, the lower the expected rate of return. Because of market changes, the makeup of your actual account portfolio will not exactly match the model portfolio. We may perform periodic adjustments of the model portfolio investments and rebalancing of your account to more closely match the model portfolio you select.

Model portfolios are developed by WEA Financial Advisors, Inc., (WEA FA) under the oversight of the WEA Member Benefits Investment Committee. Model portfolios may be adjusted at the discretion of WEA FA and the Investment Committee with prior notice to you. From time-to-time there may be extraordinary situations that will warrant more scrutiny when making adjustments. An example is the market downturn in October 2008. Although WEA FA carefully evaluates the makeup of the portfolios on a regular basis, we make no representation regarding the likelihood or probability that any or all of the portfolios will in fact achieve a particular investment goal or fulfill the risk tolerance profile as described for each portfolio. As a self-directed investor, you should carefully consider the merit and appropriateness of the available investments under your district's retirement plan in light of your own personal financial circumstances, including your other assets, income, investments, and/or cash flow needs.

Re-Assess Your Investment Needs Regularly

Because your needs, goals, portfolio, and situation may change over time, be sure to re-evaluate your investment strategy at least once a year. You can always choose a different model or create your own mix. Redemption fees may apply. When participating in a WEA Member Benefits model portfolio, you must complete the Risk Profile Questionnaire every three years. You may not continue to use the model portfolio option if you do not timely complete a Risk Profile Questionnaire. In such an event, and if we receive no other instruction from you, your plan assets will be moved to your plan's QDIA (qualified default investment alternative).

**Must be a WEAC member, Wisconsin public school employee, or current participant in a Member Benefits program to qualify for the free consultation service.

***Fee-based service. Must be a WEAC member, Wisconsin public school employee, or current participant in a Member Benefits program to participate. Family members may also be eligible. Call for details. Wisconsin residency required. Fees and services subject to change. Listed fees effective as of July 1, 2014. Terms controlled by signed service agreement.

All investment advisory services are offered through WEA Financial Advisors, Inc.

Follow this link for important 403(b) disclosures.

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