Most investment advice firms rely on standardized risk questionnaires.
To assign clients to stock market risk categories.
An determine 401(k) mutual fund asset allocations.
It’s a tidy process.
More to keep the firms and advisors out of trouble.
Than to improve individual 401(k) mutual fund decisions.
Individual 401(k) investor returns.
Often fall short of the investment returns of their 401(k) mutual funds.
The problem is in the questions asked.
And the disregard of owning the best 401(k) mutual funds available.
I don’t ask my individual 401(k) investment advice clients silly questions.
I provide them the real-life ranking of their default 401(k) mutual fund options.
Too much psychology and emotion in asking risk management questions.
Your 401(k) mutual fund rankings don’t include either element.
“It is what it is.”
Either you own the best mutual funds available in your 401(k).
Or you are taking all the risks of stock market investing.
And not getting the investment returns you deserve.
Interested in a real-life approach to picking your 401(k) mutual funds?
P.S. How much loss you can stand in your 401(k) is a silly question to ask anyone.
