Later this week, it is already the 2021 Thanksgiving holiday. Here is hoping that all your holiday traditions get back to normal.
Amid all the family and friend events, I hope you can find at least a few minutes of down time. Here is a quick idea to profit from those few minutes alone.
Review your current company 401(k) retirement plan holdings. Open your September 30, 2021, quarterly paper statement. Better yet, log in to your company 401(k) retirement plan account website.
In either case, find the column or the tab that lists past investment returns. There is a huge investment performance gap between some of your current 401(k) mutual funds and the best mutual funds available to you.
You are taking all the risk of investing in the stock markets. But you are not getting your fair share of investment returns. That condition does not allow for the greatest growth of your company 401(k) savings.
Here is how to close your company 401(k) mutual fund investment performance gap.
The U.S. stock market have recently closed at all-time highs. Interest rates are clinging near all-time lows. That last few years are “as good as it gets” for any company 401(k) mutual fund you currently own.
Ask yourself this question. “If the 401(k) mutual funds I own now can’t keep up with the stock and bond market averages now, when will they?”
If you currently own a 401(k) mutual fund that has underperformed the major stock and bond market benchmarks, it should be sold now. Place the proceeds in the safety of the money market.
That is right, shoot the turkey mutual fund you currently own. Call your company 401(k) retirement plan provider 800 number or sell the mutual fund online.
You currently own the same stocks and bonds in each of your company 401(k) mutual funds. This duplication of stocks comes at the expense of long-term investment performance. And adds an increased level of stock market risk.
There is no need to own four, six, or more company 401(k) retirement plan mutual funds. Owning more mutual funds does not reduce your stock and bond market investment risk. All you do is to lower your annual 401(k) investment returns.
Here is a great year-end 2021 present for your 401(k). Build up a money market balance to reinvest near the bottom of the next great stock market decline.
Do you enjoy the sale prices at your favorite store? Great. What do you have to have to take advantage of those sale prices?
You must have the money to spend when the things you want to buy go on sale. Managing the mutual fund menu in your company 401(k) account is no different.
At some point, there will be a huge stock market sale event. A money market balance in your company 401(k) account now will allow you to own the better mutual funds in your 401(k) account when the stock market risk level is in your favor.
Ric Lager
Lager & Company, Inc.
