Every marketing and investment management strategy document ever produced by your company 401(k) retirement plan sponsor and provider has promoted a “buy-and-hold” investment management strategy.
The tragedy is that these mutual fund company produced propaganda passes for a logical, organized, and disciplined investment management strategy for most individual company 401(k) retirement plan participants.
You “buy” and the mutual fund companies “hold.” That is where the term “buy-and-hold” came from.
As a result, the last two generations of individual company 401(k) retirement plan participants don’t pay any attention to their retirement plan accounts.
Why should they? They have been brainwashed into an overly simplistic approach to managing their stock and bond market risk levels.
The stock markets have come off their all-time highs. Interest rates have come up from their all-time lows. Stock and bond mutual fund risk levels are changing dramatically now. Individual investors are massively exposed to an overdue stock market correction or a continued interest rate rise.
You can’t invest for the “long-term” all the time. Long-term for my client’s daughter who started her first job last week is much difference than the long-term of my client who celebrated his 92nd birthday earlier this month.
What is your company 401(k) retirement plan principal protection strategy going forward? You really need think hard about that question now.
Buy-and-hold has never, ever preserved your company 401(k) retirement plan account before. Next time will not be different.
You are most likely well past the point in your working career where you can afford to lose a meaningful part of your company 401(k) retirement savings.
Ric Lager
Lager & Company, Inc.
