Most times individual investors fall into the same category. They think that managing stock and bond market investments is much more complicated and confusing that it really is.
The best investment management advice is often contained in the simplest common-sense statements. One of my favorites is that, “It is OK to be wrong; but it is not OK to stay wrong.”
Everyone makes a wrong investment decision from time to time. Even professional money managers make investment mistakes. That is why each year, the majority of mutual fund managers never outperform their benchmark index.
Managing individual stock and bond market investments is more about not staying wrong. When you own the wrong mutual fund in your company 401(k) retirement plan account, realize it as soon as possible.
True investment professionals never stay wrong for a long period of time. They have a risk management game plan for every investment that they own. When things go bad, they keep their losses to a minimum.
When the stock markets find a bottom, investment professionals are confident that they own the best mutual fund options available to them. On a fixed universe of mutual funds like your company 401(k) retirement plan menu, finding the best mutual funds is much easier than you think.
Right now, you most likely own at least one bad mutual fund option on your company 401(k) retirement plan menu. Let me give you an example of a bad mutual fund.
Last year in 2018, the money market or stable value account option was the best-performing option on your company 401(k) retirement plan menu. The bond mutual funds you could have owned last year were next; only because they did not go down in value for the entire year of 2018.
The stock market mutual funds in your company 401(k) started to go down in October. Some went down in value at a much faster rate than others. I bet you can guess which ones you did not want to own through year-end 2018.
Don’t be afraid of being wrong when you invest. It happens to the best of investors. Being wrong once in a while is a part of life.
Just don’t stay wrong when you invest. If you can’t find an independent third-party ranking of your current company 401(k) retirement plan mutual funds, send me an e-mail and I will provide one for you.
The most important part of being a successful long-term company 401(k) retirement plan investor is to own the best mutual fund options available to you at all times.
Ric Lager
Lager & Company, Inc.
lagerandco@comcast.net
