Minnesota company retirement plan participants don’t have a great deal of time to spend making investment management decisions in their company retirement plan accounts.
The summer of 2012 is fading fast. The kids are back in school in just a few weeks. Who has time to spend watching their company retirement plan account with the summer almost over?
Even those few people who have the interest, experience and financial sense to manage their company retirement plan accounts on their own don’t consistently make the investment management decisions necessary to preserve and grow their company retirement plan accounts.
Here is a company retirement plan investment strategy that requires a minimum amount of time and effort. This might be the perfect investment strategy for the current stock market environment and time of the year.
This strategy will lower your costs in your company retirement plan account and at the same time help you avoid making the big investment management mistakes that most company retirement plan participants repeatedly make.
Due to the financial media emphasis, and some uninformed investment professionals, individual company retirement plan participants are forever trying to chase investment returns. Constant focus of “the market” puts a great deal of pressure on most individual company retirement plan participants to remain fully invested at all times.
The truth is that the mutual funds in your company retirement plan menu are only as good as the overall stock market environment. You can’t have a good investment return on any mutual fund option in your company retirement plan account without help for the overall stock market environment.
When the stock market is rising, you have the opportunity to make money in your company retirement plan account. Owning the best mutual funds available on your company retirement plan menu when the stock market is rising is a good thing.
When the stock markets are falling, no stock market mutual fund in your company retirement plan account is going to do well. The key is knowing the difference between a rising and a falling stock market environment.
The second part of this late summer 401(k) strategy has to do with managing the risk in your company retirement plan account.
When the stock market is falling and the risk level is high, there is no law that says you have to be 100% invested. Remember that “buy-and-hold” is a mutual fund company invention; it has not one thing to do with common investment management sense.
Don’t pay a mutual fund manager to lose money in your company retirement plan account. It takes you too many years, and thousands of your own dollars, to build up your company retirement plan account principal.
Instead, seek out the safety of the money market in your company retirement plan account. The money market option in your company 401(k) retirement plan menu will preserve your company retirement plan account principal during a stock market decline.
The money market account option does not lose money and it’s free. Both of these features are good investment management decisions when you don’t have the time in the late summer to make any major investment management decisions.
Ric Lager
Lager & Company, Inc.
