The investment decisions that need to be made periodically in your Minnesota company 401(k) retirement plan should be easy to make. That statement is much different than the reality for most company retirement plan participants.
Most individual company retirement plan participants that I meet with are hugely intimidated by the menu of mutual fund options in their company 401(k) retirement plan account.
Their biggest roadblock I see for individual company retirement plan participants is the obsession with non-stop business news in the financial media. The talking heads on CNBC and Bloomberg make investment management decisions seem harder than they really are.
If you really think about it, there are only three investments you can ever make in your company retirement plan account. You can either invest in stocks, bonds, or the money market.
The best common sense investment decision needs to be made for each of these three investment areas. Long-term investment success is not much harder than learning how to manage these three places to invest your company retirement plan money.
If you just pay attention to the current cycle of the U.S. economy and the stock market, your company 401(k) retirement plan investment results will likely be good enough to build up your company retirement plan value the closer you get to retirement.
You don’t have to be highly skilled at picking the exact mutual funds in your company retirement plan menu. Instead, you just have to own stock mutual funds when the stock markets are rising.
More importantly, you can’t be 100% invested in stocks when the stock markets are falling in a big way. Most investors know from experience that the stock markets will fall when the U.S. economy is in a bad way….like the last three years!
During a falling stock market environment, the money market option in your company retirement plan menu is the only way to preserve your company 401(k) retirement plan account.
The failure to have an investment strategy in a declining economy or a falling stock market can cost you several years of company retirement plan contributions and individual contributions to your company retirement plan account.
So, if you learn how to manage the stock, bond, and money market options in your company retirement plan menu, you should be way ahead of most other company retirement plan participants.
Ric Lager
Lager & Company, Inc.
