Saving for retirement through a company 401(k) retirement plan account requires a great deal of trust. That trust includes the relationship with your company retirement plan sponsor and your company retirement plan provider.
Trust is also a requirement for the investment management advice provided by the financial advice industry.
Employees can’t choose their company retirement plan provider or the mutual fund options on the company 401(k) retirement plan menu. Every company 401(k) retirement plan participant bears the responsibility to manage their individual company retirement plan accounts.
The investment advice industry continues to promote a 100% invested at all times philosophy. This promotion is especially true in company 401(k) retirement plan accounts.
History has proven the 100% invested at all times investment management approach to be highly volatile and extremely risky.
Many individual company 401(k) retirement plan participants have ridden the stock market roller coaster up-and-down the last few years. They are extremely frustrated with their lack of preservation and growth of their company 401(k) retirement plan principal in their prime working years.
The buy-and-hold mantra generates the highest level of investment management fees for the company 401(k) retirement plan mutual fund companies. A 100% invested at all times strategy improves the profitability of the mutual fund companies.
Buy-and-hold has not consistently contributed to the long-term investment success of individual company 401(k) retirement plan participants. Most examples of higher company 401(k) retirement plan balances over the last few years have come from annual company and individual contributions.
Don’t drink from the same glass of purple Kool-Aid as the mutual fund companies. Only take as much risk now in your company 401(k) retirement plan account as you are comfortable with.
You are not required to fully participating in the next great stock market decline. That choice can be one of the best investment management decisions you ever make in your company 401(k) retirement plan account.
Ric Lager
Lager & Company, Inc.
