Saving for retirement through a 401(k) company retirement plan account requires a great deal of trust in your company retirement plan sponsor and your company retirement plan provider.
It also requires a great deal of trust in the financial advice industry.
In the middle of the current housing crisis, high unemployment, and historic stock volatility, many Minnesota company retirement plan participants just don’t feel that the financial services industry is worthy of that high level of trust.
Do you know anyone who has retired in the last few years? If you do, ask them what the combination of their lower real estate valuations and reduced retirement plan account balances has done to their level of trust.
A company 401(k) retirement plan participant can’t choose their company retirement plan provider or the mutual fund options on the company retirement plan menu. Every company retirement plan participant bears the responsibility to manage their individual company retirement plan accounts.
The financial industry says you need to stay 100% invested in stocks at all times. History has proven this investment management approach to be highly volatile and extremely risky; especially as a person gets closer to their ideal retirement age.
Many individual company retirement plan participants that I meet with have ridden the stock market roller coaster up-and-down the last few years. They are extremely frustrated with their lack of preservation and growth of their company retirement plan principal in their remaining working career.
In reality, the constant promotion of 100% stock market exposure at all times generates the highest level of investment management fees for the company retirement plan mutual fund companies.
The “buy-and-hold” mantra has been perpetuated by the mutual fund companies for their profitability; not due to the long-term investment success of their company retirement plan mutual fund clients.
Don’t drink from the same glass of purple Kool-Aid as the mutual fund companies. Only take as much risk now in your company retirement plan account as you are comfortable with.
Not fully participating in the current stock market decline is one of the best investment management decisions you can make in your company retirement plan account.
Ric Lager
Lager & Company, Inc.
