I have been blogging my concerns about the current stock market environment for the last several weeks. If you read similar content from me before, I apologize. If you are reading about my concerns here for the first time, I hope I can make you think about what you need to think about now.
There are two common complaints that I hear most often from the Minnesota company 401(k) plan participants that I meet. The first complaint is that they wish they had more time to pay attention to their company 401(k) retirement plan account.
The second most common complaint is that they wish they would not have to repeat the same investment management mistakes every few years.
In the last couple of weeks we have entered into another stock market environment that presents an opportunity to learn from your past investment management mistakes.
There are many possible reasons behind the current stock market decline. The U.S. government is shut down, economic growth is hard to find, unemployment is still far too high, and the U.S. government may be bankrupt in two weeks.
The real reasons for the stock market is going down now are not important. The only thing that matters is that your individual company 401(k) retirement plan account does not fully participant in the downturn.
When stock market prices become inflated, it does not take much bad news to bring the stock prices back down to reality. This correction is many times a painful process for most individual company 401(k) plan participants.
The investment risk to the downside is not worth the small potential reward to the upside. Your best investment management decision now is to protect what you have rather than hope for more stock market gains over the near term.
The U.S. government will open up again. The debt ceiling will get figured out. The Vikings may win as many games as they lose this season.
An individual company 401(k) account represents a working lifetime of retirement savings. The first rule of managing those savings is to protect what you have.
You currently own some mutual funds in your company 401(k) retirement plan account that have lagged the popular stock market averages over the last couple of years.
Sell those underperforming mutual funds. Place the proceeds into the safety of the money market. You can then use that money to buy better mutual funds at lower prices.
The stock market will get things figured out. The U.S. economy will improve. Have some money to spend when both those events take place.
Ric Lager
Lager & Company, Inc.
