The financial media has an endless supply of articles about how individual Minnesota company 401(k) retirement plan participants can fix their investment management woes.
Quick fix company 401(k) investment management articles fall into the same category and self-help articles. Losing weight, getting in better physical shape, and changing bad habits are not easy to do.
Improvement in your company 401(k) retirement plan account investment returns is possible. The first thing that is required is to understand the two main company 401(k) retirement plan investment management problems that you face.
How can you know what the best solution is when you can’t define your problem?
The first main problem is that you don’t know what to buy. You don’t know which individual mutual fund options to own on your company 401(k) retirement plan menu.
The good news is that the stock market has gone up for the last five years. It has not made much difference which stock mutual funds you have owned. All stock mutual funds are up.
The bad news is that most mutual funds own the same stocks. And those same stocks are only as good as the overall stock market environment.
It is fun to ride the stock market up and not pay any attention to your mutual funds in your company 401(k) retirement plan account. It is not fun to buy-and-hold your company 401(k) retirement plan mutual funds in the next stock market correction. That brings us to the second main company 401(k) retirement plan investment management problem.
The second main problem is that you don’t know when to protect your recent stock market gains. Said another way, you don’t know when to sell.
The stock market is very dependent on the U.S. economy, interest rates, and monetary policy. All three of these concepts don’t get the attention that they deserve from most individual company 401(k) retirement plan participants.
Do you remember the first time that you heard the expression “nothing lasts forever?” Keep that thought in mind when you think of the last five years of stock market returns.
A bad stock market correction is long overdue. I don’t know when. And I don’t know how far down. But I do know my stock market history.
Have a plan in place to protect the last few years of your company 401(k) retirement plan investment gains. This plan will provide the answer to the second of your company 401(k) investment management problems.
Ric Lager
Lager & Company, Inc.
