All this week, company employees will be laser focused. Not on their work. Instead, these employees will need to fill out their brackets for this year’s 2017 NCAA men’s college basketball tournament.
Not many people are college basketball experts. For that reason, a seeding process ranks college basketball teams on qualitative and quantitative rankings. In the NCAA’s proprietary seeding system, higher ranked teams play lower ranked teams in every tournament game.
The seeding process ensures that the strongest teams don’t end up playing each other too early in the tournament. TV ratings and ad revenues are much too important for the NCAA to have the best teams beat each other early in the tournament.
One of the NCAA tournament committee seeding components is wins and losses versus peers. This head-to-head competition helps determine a team’s tournament seeding.
A similar seeding process is available for the mutual fund options found on your company 401(k) retirement plan menu. Every mutual fund can be seeded against all the other default company 401(k) retirement plan mutual fund options.
The seeding results can improve the investment management decisions that you make in your company 401(k) retirement plan account. Better decisions will preserve and grow your retirement plan assets over the long-term.
Here’s a little NCAA tournament seeding history to help make my point. Since 1985 through last year, the top 1-3 seeded teams have won 73.04% of all their tournament games played. The bottom three seeded teams (14-16 seeds) have won only 7.69% of their tournament games played.
Right now, you most likely own at least one mutual fund that is not a high seed. This mutual fund has gone up in value due to the good stock market environment over the last few years. But the investment performance is far behind the investment performance of the higher seeds found on your company 401(k) retirement plan menu.
You may currently own a number 14 seed mutual fund. Your long-term company 401(k) retirement plan account investment performance will improve if you own a current number 1 seed mutual fund.
Spend the same amount of time reviewing the current seeding of your company 401(k) retirement plan mutual fund menu as you will filling out your NCAA basketball tournament bracket.
The stock market is near all-time highs and interest rates are near all-time lows. The worst mutual funds that you currently own should be sold. Reinvest the proceeds into the highest seeded mutual funds that fits your stock and bond market risk level.
Long-term company 401(k) retirement plan investment success is a result of owning the highest seeded mutual funds available. Let today’s investment management technology give you the best opportunity to win the company 401(k) retirement plan tournament.
Ric Lager
Lager & Company, Inc.
