Last week, Hurricane Hermine slammed into the Panhandle region of Florida. The event caused mandatory evacuations due to life-threatening flash floods.
The first U.S. hurricane of the season to make landfall is another reminder of how insurance coverage can protect your most valuable assets.
Take homeowner’s insurance as an example. If your home burns to the ground or gets hit by a hurricane, the insurance company will pay you to replace your house.
Your annual homeowner’s insurance premium is essentially a smaller annual bet to avoid much larger catastrophic losses on your home.
After your home, what is the next largest financial asset that you own?
For the majority of individual investors, that asset is their company 401(k) retirement plan account. For married couples or partners, joint retirement plan assets are likely to have a larger market value than the equity in their home.
I remind my individual company 401(k) retirement plan advice clients that their annual company 401(k) investment advisory fee is similar to their annual homeowner’s insurance premium.
Your homeowner’s insurance company provides for catastrophic loss prevention on your house. Your annual investment advisory fee provides for catastrophic loss prevention in your company 401(k) retirement plan account.
My individual company 401(k) retirement plan advice clients and I work together to limit the amount of financial damage that they can accept. In most cases, their company 401(k) retirement plan losses are limited to 10-15%.
My clients can’t relive the 40-50% company 401(k) retirement plan account losses of 2008-2009. They don’t have enough working years left to recover that dollar amount of catastrophic investment losses.
Company 401(k) retirement plan investment advice from an independent fiduciary advisor can prevent another historic negative stock market decline. The last several years of stock and bond market investment gains and annual contributions in your company 401(k) retirement plan account are at risk.
Ric Lager
Lager & Company, Inc.
