By now, you have opened your quarterly company 401(k) account statement for the July 1 through September 30, 2011 calendar quarter. This period is defined as the 3rd calendar quarter of 2011 (Q3 2011).
You can see how awful this time period was for your company 401(k) retirement plan account value. You may have lost upwards of 20% of your company retirement plan account value since June 30, 2011.
Individual company retirement plan participants close to or already in retirement can’t go through many more periods like this recent quarter. The simple fact is that most company retirement participants don’t have enough time left in their working career to recover from these historic losses of their company retirement plan principal.
These recent events should serve as another lifetime investment management lesson. The lesson is that in a few short weeks, a major change in the risk level of the stock market can set your retirement plan account value back several years.
During the last three calendar months, every individual company retirement plan participant needed to adjust their investment management strategy to reflect the current economic and stock market realities. To remain fully invested in the buy-and-hold or “set it and forget it” investment mode cost tens of thousands of dollars in company retirement plan principal.
Even a small a percentage as 25% of your company retirement plan account invested in the money market during the early stages of the recent stock market downturn would have had a huge impact on the preservation of your company 401(k) retirement plan account principal.
You never need to take the risk of 100% stock market exposure in a clearly deteriorating U.S. economic and stock market environment. Investing retirement plan principal in the money market is sometimes the best company 401(k) retirement plan investment you can ever make.
Ric Lager
Lager & Company, Inc.
