This week, employees at large and small Minnesota companies are focused. The focus is not on their work. They need to fill out their brackets for this year’s NCAA college basketball tournament.
Not many people are college basketball experts. Picking the winners of 63 consecutive tournament basketball games in a row is a monumental task.
How can a casual college basketball fan make an intelligent and informed choice in a basketball game between two teams from different parts of the country?
The answer is called seeding. This is the process of ranking basketball teams based on qualitative and quantitative rankings based on their performance over the regular season.
The NCAA has their own proprietary seeding system. Higher ranked teams play lower ranked teams in the NCAA tournament. The higher ranked teams win the vast majority of the tournament games.
Once every few years a lower seeded team that wins a game over a higher seeded team. But it does not happen very often. You are not going to win your office pool if you pick all the lower seeded teams.
You have a similar seeding system in your company 401(k) retirement plan account.
Your company 401(k) retirement plan provider is required to list the investment performance of all the mutual fund options. These mutual fund rankings are like the NCAA tournament seedings.
These mutual fund rankings are updated every quarter. The investment performance numbers go back several years.
The mutual funds on your company 401(k) retirement plan menu are ranked by type of mutual fund and by asset class. Use these rankings to improve your investment management decisions.
You probably own a mutual fund or two in your company 401(k) retirement plan account that is not highly ranked. These mutual funds have gone up in value based on the good stock market environment over the last few years. But these funds are far behind the investment performance of the best mutual fund options on your company 401(k) retirement plan menu.
Think about your company 401(k) retirement plan menu as a different kind of bracket challenge. Use the ranking tools available to you in order to improve your company 401(k) retirement plan investment performance.
Lower ranked mutual funds can do well over the short term. Just like a lower seeded NCAA basketball tournament team can win one NCAA tournament game.
Long term investment success in your company 401(k) retirement plan comes from owning the highest ranked mutual funds on your company 401(k) retirement plan menu.
Check out the rankings on your company 401(k) retirement plan menu. Only own the best mutual funds available. You will sure increase your chances of winning the retirement plan tournament.
Ric Lager
Lager & Company, Inc.
