“I am more concerned about the return OF my money than the return ON my money.”
Mark Twain is credited with the quote above. Every few years, individual company 401(k) retirement plan participants need to pay very close attention to this all-time great investment advice.
Since early March of 2009, the U.S. stock markets have gone up. Over the same time period, U.S. interest rates have gone down. The last ten years have truly been one of the best buy-and-hold company 401(k) retirement plan investment management environments ever.
Most individual company 401(k) retirement plan participants have developed the bad habit of not paying attention to their retirement plan accounts.
Any forecast for an eminent stock market crash are worthless. But you can gain some value from a warning to putting together a stock and bond market risk management game plan for the money in your company 401(k) retirement plan account.
The last great stock market decline was from July 2008 to March 2009. Several years of stock market gains were wiped out in a few short months.
Let’s face it, you most likely are not paying close attention to your largest retirement asset. You have not had to over the last few years. There has been no stock or bond market event recently to remind investors that a buy-and-hold investment management strategy can quickly turn into a buy-and-hope investment management strategy.
If you go to the casino to play blackjack, you might win right away. But the longer you continue to play, the faster you will lose the money that you won. And you might lose the money that you started with. That behavior is exactly what the casino is hoping you do.
Successful long-term stock market investing requires that you have an investment management game plan when the stock market declines. You need to be able to preserve your stock market gains. Paying no attention to a massive change in the stock market risk level is a very dangerous retirement planning strategy.
Right now you need to have an honest conversation with yourself. Begin by reviewing Mark Twain’s famous quote above.
Ric Lager
Lager & Company, Inc.
