In a very famous Aesop fable, we are introduced to the ant and the grasshopper. The decisions that they make about how they manage their lives affect their future.
The last eight-plus years of stock market advance has turned many individual company 401(k) retirement plan participants into fun-loving grasshoppers. Most individual company 401(k) retirement plan participants that I meet with are satisfied with their last few years of buy-and-hold and set-it-and-forget-it investment returns.
What is not to like? Your quarterly company 401(k) statement keeps going up. Record high stock markets and record low interest rates equal record high company 401(k) retirement plan balances.
I am all for enjoying the current all-time highs and record company 401(k) retirement plan balances. Grasshoppers forever!
But stock and bond market history will repeat itself. Most likely, there will be a stock market event that will take place before your desired retirement date.
Now is a good time to remember an old Wall Street adage. That is, it is not how much money you make owning stocks that is important. The important thing is how much of those stock market gains that you keep.
At some point, all individual company 401(k) retirement plan participants have to begin to act like the forward-thinking ant and plan for the future.
The ant makes decisions that they expect will favorably impact themselves and preserve their possessions. Growth, at some point ends. Sometimes very abruptly.
Ric Lager
Lager & Company, Inc.
