I run headfirst into this individual 401(k) investment management issue.
An individual 401(k) investor follows a risk score.
Generated by an online questionnaire from their 401(k) provider.
That score then influences the 401(k) mutual fund they buy.
It urges them to “set-it-and-forget-it.”
When the stock market risk levels change?
The risk score doesn’t.
My doctor doesn’t give me a risk score.
He reads the latest tests.
Then decides whether my diet, activity, or medication needs to change.
My doctor and I look at current conditions and act accordingly.
Why does a static online risk questionnaire.
Substitute for 401(k) investment management?
Your 401(k) mutual fund menu was picked for you.
Your first job is to make the best mutual fund decisions possible from limited options.
Your second job is to avoid giving back years of 401(k) investment gains.
Every few stock market cycles.
Diversification.
Asset allocation.
Dollar-cost averaging.
None of them answer the most important question:
How do I manage the stock market risk in my 401(k) now?
When stock market conditions change, 401(k) mutual funds must change.
A risk score can’t do that.
Your 401(k) mutual funds need ongoing stock market risk management.
Stop asking, “What’s my risk score?”
Start asking “What 401(k) mutual funds are holding value now?”
Interested in a 401(k) principal preservation strategy?
Let’s connect and I can share the details.
P.S. Your 401(k) deserves management, not a meaningless risk score.
