Happy New Year! Late, but better than nothing.
As a 401(k) investment advisor this is one of my favorite times of the year. Many individual 401(k) participants are recommitting themselves in the new year. To pay more attention to their most important retirement savings account.
This is also the time of year where I recommit to my 401(k) advice clients. To help them improve their investment management decisions. To preserve and grow their 401(k) accounts this year.
The most important resolution for your 401(k) is simple. Get to know your default 401(k) mutual fund options this year. That starts by taking a closer look at the menu of investment options in your 401(k).
Have you guessed “what to buy” for the last few years? Or have you made your 401(k) mutual fund selections with a plan and purpose?
The “buy-and-hope” 401(k) investment management strategy has worked for a long time. And it might continue to work. Until it doesn’t!
Many 401(k) plans allow you to invest at different levels of risk. Offering different types of stock and bond market mutual funds. Are you investing aggressively, moderately, or conservatively? Do you know the difference?
Each default mutual fund on your 401(k) menu offers a prospectus. A document that describes in detail how the fund works. Including its investment objectives, strategy, past performance, and expenses.
Have you read your prospectus? For each 401(k) mutual fund you currently own? Do you understand how the funds in your 401(k) work? Do their long-term investment objectives match yours?
A 401(k) is an indispensable retirement saving tool. You owe it to yourself to learn more about how it works. The past investment performance. How much it costs to own it each year. And how much risk you are taking to own it.
You must realize by now. How much more work this is to analyze each of your default 401(k) mutual funds. More personal financial details you don’t have time to do. Regardless of the time of the year.
A simple solution is to add a 401(k) investment advisor to your personal financial team. Like your accountant, banker, or investment advisor.
An independent, third-party fiduciary-level investment advisor. Not affiliated with your company 401(k) sponsor (your company). Or your company 401(k) provider (Fidelity, Schwab, Vanguard, etc.).
I volunteer. To provide you with a level of 401(k) understanding you likely have never experienced. A “what to buy” 401(k) investment management strategy. Along with a complete understanding of why you own that 401(k) mutual fund now.
Add this to your list of 2024 New Year’s Resolutions. “Get to know my 401(k).”
Ric Lager
Lager & Company, Inc.
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