Every time the U.S. stock markets go down in a big way, the same financial media avalanche of investment advice follows. The never-ending articles and TV experts stand in line to tell you “not to panic and think about the long-term.”
The remainder of their predictable stream of timely investment advice is to not pay any more attention to the stock market. Don’t read the paper, turn off the TV, and for sure, don’t go online to view your company 401(k) retirement plan account balance.
“You are not smart enough to manage the stock and bond market risk you are taking your company 401(k), so just don’t do anything.”
This kind of investment advice is actually dangerous for a good many individual company 401(k) retirement plan participants. Talking down to individual investors is criminal.
Individual investors are supposed to take their time and attention away from their career and lifetime retirement savings and not take any steps to prevent potential significant declines?
As an independent investment advisor for over 34 years, I don’t have any individual company 401(k) retirement plan investment advice clients who think about their long-term that way.
Instead, they fear a repeat of their 401(k) turn into a 201(k) like many of their co-workers and family members experienced from Summer 2008 to Spring 2009.
All the company 401(k) investors that I have met with over the last few months are severely over-invested and aggressively invested in U.S. stocks and bonds.
I can’t get away with the “long-term” double-talk with my individual company 401(k) retirement plan investment advice clients. Since mid-September, I have reminded them about the process we have in place to protect the last several years of stock and bond market investment gains.
These clients are fully aware of how much money has been built up in their 401(k) accounts from their own contributions and company-matching contributions over the last few years.
Not every individual company has the option to “think about the long-term.” No offense intended, but a great many of my clients have already had their long-term.
If you are a handful of years away from your desired retirement, you don’t have any long-term either. And if you are currently not paying attention to risking interest rates and falling stock prices you are taking a huge risk with your retirement assets.
When you are in your 40’s, you can live through losing a large part of your company 401(k) retirement plan account value. If you are in your 50’s, stock and bond market losses can change the rest of your life.
Ric Lager
Lager & Company, Inc.
