Your company 401(k) account intends to build your retirement nest egg wealth. The last few years that has been an exceedingly difficult investment management challenge.
The stock and bond market went down big in 2022. Each market has rebounded so far in 2023. But many individual 401(k) participants I talk to are about “break even” the last couple of years.
Even with two years of personal 401(k) contributions. And the same for company-matching 401(k0 contributions.
Managing your 401(k) accounts is not as easy as it used to be. Sending your payroll and company-matching contributions to any mutual fund you choose.
Each company 401(k) retirement plan menu has a unique set of features. Unfortunately, most individual investors guess at a handful of mutual funds to own. By default, they fall into a “buy-and-hope” 401(k) investment management strategy.
Not paying any attention to your 401(k) account may have worked earlier in your working career. Here is a stark reminder. Those days are long gone.
You can’t count on the preservation and growth of your 401(k) on a long-term consistent basis. For the remainder of your working career.
Successful long-term company 401(k) investing requires thoughtful analysis. Starting with a ranking of the default mutual funds on your company 401(k) menu.
Company 401(k) mutual funds are expensive to own. It is fine to own expensive mutual funds. But only if their annual investment performance is worth the annual cost.
Ask your current financial advisor to provide a ranking of your 401(k) mutual funds. By annual expenses and investment performance. If he or she is unable or unwilling, find a fiduciary investment advisor who will.
Ranking 401(k) mutual funds solves one problem. And it creates another opportunity. In time for Christmas.
Most 401(k) retirement plans are too restrictive. Too many high cost and low performing mutual funds.
Have you ever wished your company 401(k) retirement plan had more choices? Hold that thought, and that wish. Let me answer that question with a question.
Does your 401(k) plan offer an SDBA (self-directed brokerage account) option?
Earlier this month, I talked to two people at different large local companies. Each person has worked at their company for over 10 years. Each person did not know about the SDBA option on their company 401(k) retirement plan menu.
I did a little homework for each employee. Both were completely unaware of the SDBA 401(k) account option available to the now.
The self-directed brokerage account is a traditional brokerage account. Inside your company 401(k) retirement plan. In that account, you can own low cost mutual funds, stocks, and exchanged traded funds.
You can move your entire 401(k) account balance to the self-directed brokerage account. Or at least a large part of your 401(k) account value.
Do you own an iPhone? Would you like to own Apple stock? Or the stock of any other great company whose products you have owned for many years?
Well, you can buy that stock in your self-directed 401(k) brokerage account.
Lower your annual 401(k) costs. And open up a whole new universe of investment options. How about this idea for a Merry 401(k) Christmas?
Find out if you have the self-directed brokerage account option in your 401(k). It might be the first step to a more profitable 2024.
Ric Lager
Lager & Company, Inc.
Have you been a good boy or girl this year? If so, give yourself the self-directed brokerage account gift to your 401(k). You deserve it.
If you have any questions on your 401(k), comment below. Or reach out to me directly on LinkedIn.
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