What’s the biggest risk in 401(k) investing?
Most people get this wrong.
Some 401(k) investor would reply “losing money.”
Others would respond “fear of missing out.”
Both are correct.
But this is what they miss.
There are actually two risks in 401(k) investing:
1. The risk of losing hard-earned 401(k) principal.
2. The risk of owning the wrong 401(k) mutual funds.
You can’t eliminate either one.
But you can manage both at the same time.
After 45+ years in the individual investment advice business.
Here’s what I have learned about individual 401(k) investment advice:
Know where your 401(k) mutual funds rank.
By annual expenses and investment performance.
Diversification, Asset Allocation, and Rebalancing.
Don’t mean a damn thing if you own the wrong 401(k) mutual funds.
And continue to own them as the stock market move higher.
Set a 401(k) “stop loss.”
A dollar amount or percentage of your 401(k) account.
You are willing to lose no more than the “stop loss” amount.
The best individual 401(k) investors I know.
Manage both of these 401(k) investment management risks.
At the same time.
Ready to manage both of these risks in your 401(k)?
P.S. If you are feeling anxious about your 401(k) manage these two risks first.
