I just wrote this article on March 21st, 2012 for my Golden Valley Patch Blog.
The opening round games of the 64-team 2012 NCAA Men’s Basketball Tournament were completed last weekend. Of the 32 games played, only 10 games were won by the higher tournament seed—the team that was supposed to win the game according to the experts.
Most Minnesota company retirement plan participants that I work with are no more than casual college basketball fans. When forced to make picks in the NCAA tournament every year either at work or among their friends, they usually pick the highest seeded team or the “favorite” to win the opening rounds of tournament games.
If you followed the expert picks last week, the first two round tournament results gave you a less than 1-in-3 chance to succeed. The expert picks surely cost you time, money and ego last weekend.
The year-to-date investment results in your default company retirement plan menu are much the same. The “favorite” mutual funds that make up the majority of options in your company retirement plan menu have lost the investment performance game by a large margin so far in 2012.
The year-to-date investment returns of the Target Date or Target Term mutual funds in your company retirement plan menu have lagged the overall stock market indices. The handful of Mid and Small Cap U.S. stock mutual funds available in your company retirement plan menu have been the best investments so far in 2012.
Sadly, most people don’t spend nearly the same account of time and effort picking their company retirement plan mutual funds as they do picking their NCAA basketball tournament teams.
In order to improve the investment performance in your company retirement plan account this year, it might be useful now to view your current retirement plan menu the same was as you view the Sweet 16 brackets later this week.
Instead of continuing to own the large, well-known, “set-it-and-forget-it” mutual fund options, pick the mutual fund options in your company retirement plan account that are playing the best now in the current stock market environment.
Many of the big-name mutual fund “favorites” have disappointing investment results so far in 2012. Don’t continue to hope that their investment performance might change in the near future.
Ric Lager
Lager & Company, Inc.
