Spring means spring cleaning. And spring-cleaning means yard sales. There has to be someone who thinks the junk you own is actually worth something, right?
This Spring there is much more cleaning to be done than just closets and garages. There is very likely some clutter that needs attention in your company 401(k) retirement plan account.
You currently own some company 401(k) retirement plan mutual funds that have not kept pace with U.S. stock market benchmark investment returns over the current record setting stock market cycle.
These mutual funds most likely had a bad investment performance year in 2018. Through the first quarter of 2019, the investment performance lagged even more.
Here is a very basic company 401(k) retirement plan investment management question for you. Your answer is guaranteed to improve your company 401(k) investment returns going forward.
If the bad mutual funds you currently own can’t keep up with the stock market averages in a good stock market, when will they ever be able to outperform the better mutual fund options on your company 401(k) retirement plan menu?
The answer is never. As soon as you admit this fact the better for your 401(k). All company 401(k) retirement plan menus have a handful of bad mutual funds. The trick is to know which ones they are and to never own them; in up, down, or sideways stock markets.
If you currently own a “lagging” company 401(k) retirement plan mutual fund, you have a serious investment management problem. You took 100% of the stock market risk and received only a small fraction of the best investment returns available to you.
Spring is time to “clean house” in your company 401(k) account. It is now time to dramatically improve your current mutual fund choices.
The U.S. stock markets are currently trading near all-time high price levels. Now is a great time to sell the worst mutual fund options that you currently own in your company 401(k) retirement plan account. This spring-cleaning event with help your retirement savings in two important ways.
First, it will preserve your stock and bond markets investment gains since late last year. The U.S. stock market are up from their nerve-racking December lows. U.S. interest rates are at the lowest levels since December 2017.
The safety of the money market or stable value account is as good an investment option now as any. Keep as much money in this risk-free account as you are comfortable with over the near term.
Second, the proceeds from the sale of your worst company 401(k) retirement plan mutual funds will provide you with the money to buy more of the best mutual funds available to you.
The stock markets are likely to “pull back” at some point over the summer months. When stocks going on sale, you have to have money available to buy them at lower prices.
You can’t lose with an old-fashioned Spring cleaning of your company 401(k) retirement plan account now.
Ric Lager
Lager & Company, Inc.
