The title of this blog post may seem counter intuitive at first glance. Let me try to explain the meaning.
For the last nine-plus years, the “set-it-and-forget-it” company 401(k) retirement plan account investment management strategy has worked wonders. Higher stock prices, lower interest rates, individual contributions and company-matching contributions have all combined for record levels of individual company 401(k) retirement plan account balances.
That was all the way back in September. Let’s try to focus on now.
Rising interest rates and falling stock prices are here. There is a very long list of professional money managers and investment advisors who have advised their clients to take a much more cautious approach to managing their money going forward.
Right now, the best investment management strategy for your company 401(k) retirement plan account is to be aggressive. Capitalize on the current changes in the U.S. stock and bond market environments.
For most individual investors, being more aggressive with your company 401(k) means taking a more proactive investment management approach.
For the last several years, you have not had to make any investment management decisions. Everything you owned, both stocks and bonds, went up in value. Growth of your company 401(k) retirement plan principal was all but assured.
When you add in your own contributions and the company-matching contributions, you have looked like an investment management genius over the last few years.
Now, the aggressive investment management approach is to preserve the last several years of your company 401(k) retirement plan growth and annual contributions.
Being aggressive now is not being reckless. In fact, just the opposite. Being aggressive means taking the necessary steps to not lose the last several years of your company 401(k) retirement plan growth.
Analyze your current company 401(k) retirement plan account mutual fund holdings. Collect information on the other mutual fund options available to you. Then manage the stock and bond market risks that has now emerged over the last few weeks.
If you don’t think you have the knowledge or experience to make the necessary stock and bond market risk management decisions, find an independent investment advisor who can help you sort things out.
This time of “set-it-and-forget-it” has come and gone. Your company 401(k) retirement plan account is in desperate need of a confident and proactive investment management strategy that preserves your account value.
The U.S. stock, bond, and political environments are filled with unnecessary risks now. Don’t’ gamble with your company 401(k) retirement plan account balance on the eventual outcome.
Ric Lager
Lager & Company, Inc.
