Here is the single best investment management decision that you can make this September. Determine how much more money are you willing to lose going forward in your company 401(k) retirement plan account.
The financial media is not capable of helping you make that decision. How many times have you heard or read about “buying-the dip” over the last couple of weeks?
Your company 401(k) retirement plan mutual fund managers are no help. The mutual fund industry invented the “Buy-and-Hold” investment strategy a generation ago. Mutual fund companies make the most investment management fees when you are 100% invested at all times.
The majority of financial advisors have laughable responses to the current stock market volatility. “Rebalancing” your company 401(k) retirement plan account will not limit your future stock market losses.
The month of September is a time to take a “gut check.” How much more company 401(k) retirement plan principal you can lose before you sell everything?
Before your emotions take over, use your head. Set a U.S. stock market exit strategy. That strategy will largely determine your company 401(k) retirement plan investment returns for the remainder of 2015.
Your U.S. stock market exit strategy should be based on the combination of stock market risk and your personal tolerance for stock market losses.
The current trend of all worldwide stock markets is down. There is little chance that you can safely remain fully invested in a U.S. or International mutual fund. The preservation of your company 401(k) retirement plan principal should now be your primary investment objective.
The only other thing to decide now is how much more downside stock market risk you are willing to take. You need to limit your company 401(k) retirement plan losses until the stock market trend is in your favor.
The S&P 500 stock market benchmark is down a little over 6% for the year-to-date in 2015. Principal losses at that level can easily be recovered. Larger losses in your company 401(k) retirement plan account going forward are completely up to you.
Ric Lager
Lager & Company, Inc.
