The very basis of a company 401(k) retirement plan account is based on optimism.
The theory is that you take money every month out of your paycheck. You save and invest that money for the long-term. When you want to retire, you have enough money saved in order to make that happen.
If only it were so easy. I have listened to enough the company 401(k) horror stories over the last 31 years to realize that it such a simple investment management plan is not so easy.
As we enter 2015, company 401(k) retirement plan participants are riding the last great stock market wave higher. Not nearly enough of these same individual investors are concerned about any meaningful stock market correction.
Optimism for the future is great. It is good for you mental health and for your human spirit. Unfortunately, optimism in the stock market loses individual company 401(k) retirement plan participants a great deal of money every few years.
Optimism never takes into consideration the possibility of negative future events. The history of the stock market is full of negative future events.
January 2015 is a great time to put a principal preservation investment strategy in place in your company 401(k) retirement plan account.
The U.S. stock markets have risen for the last five-plus years to all-time price levels. That fact makes the timing of a company 401(k) retirement plan account principal preservation game plan even better.
Be optimistic with your family, friends, and your career. Be realistic with your company 401(k) retirement plan investments. The stock market is not going to keep going up forever.
Have a plan. Be realistic.
Ric Lager
Lager & Company, Inc.
