CNBC recently published an article that appeared to be just another in a long series of company 401(k) target date mutual fund promotional articles.
Upon further review, this article quoted some very scary numbers regarding company 401(k) retirement plan mutual funds.
About 80% of all company 401(k) retirement plans offer target date mutual funds. I know the plans that I monitor for my individual company 401(k) investment advice clients are overrun with target date mutual funds.
If you take the time to read the article linked above and still believe that target date mutual funds are the “set-it-and-forget-it” investment suitable for your company 401(k) retirement plan account, then consider the new U.S. stock and bond market conditions that we must live in.
The U.S. stock and bond markets are in a state of internal turmoil right now. How many headlines have you read recently about the “increased volatility” of the markets?
Volatility is a new word that has crept into financial journalism. I am old enough to remember what the phrase “increase volatility” really means. IT means that the stock and bond market conditions exist that increase the probability that you can lose a great deal of money in your company 401(k) retirement plan account going forward.
Now is not the time to mess around with the last nine years of your stock and bond market investment gains in your company 401(k) retirement plan account. I can make the same statement about your last nine years of company-matching and individual company 401(k) retirement plan contributions.
Don’t fall for the company 401(k) retirement plan provider propaganda. The comment about the Fidelity Freedom Funds recent decline from the Fidelity spokesman quoted in the article is both short-sighted and irresponsible.
The statement in the article that investors, “don’t necessarily have the savvy to choose their own investments” is completely wrong.
The investment management decisions that are required to manage a default menu of company 401(k) retirement plan mutual funds is an everyday event for an independent, third-party, fiduciary-level investment advisor.
If you can’t figure out your stock and bond market risk exposure on the target term mutual funds you currently own, then ask your investment advisor for help. If your investment advisor can’t or won’t get involved providing investment advice for your company 401(k) retirement plan account, then find an investment advisor who will.
Now is not the time to go through another round of 50+% stock and bond market losses like many target term mutual funds suffered during the last great stock market crash of 2008-2009.
I am not predicting an upcoming stock or bond market crash; because I don’t have to. My individual company 401(k) retirement plan investment advice clients know what they own, why they own it, and we are managing the stock and bond market risks continually.
Ric Lager
Lager & Company, Inc.
