It is that time of year again. Individuals finding time in late December to set resolutions for the New Year. At least one of those New Year’s Resolutions should be to manage your investments better in 2022.
Plain and simple, a resolution is a promise that you make to yourself to change a habit or to develop a new habit. That resolution then becomes a personal goal for the New Year.
Fear is the worst part of changing a habit. Fear of failure, fear of success, fear of the unknown, fear of making a mistake. Investors suffer from a combination of fears over their investment lives.
Plans, goals, and ideas to change are no good on their own. You must get started and do something.
So, get started this last week of 2021. Pick one part of your investment management life to make changes for the New Year.
Your most recent company 401(k) statement is a good place to start. Make positive resolutions to one of the largest parts of your financial assets.
Successful long-term company 401(k) account management comes down to one simple fact.
Review your 401(k) mutual funds now. Confirm your current mutual funds reflect changes in the economy and interest rates. You might as well consider the current virus status too.
You do not need a fancy 401(k) risk management strategy. Start with the following question.
“How much money would you be willing to lose in the next great stock market decline or rise in interest rates?”
Your current company 401(k) account value is close to all-time highs. In dollars or percentages, how much loss are you willing to accept?
I know that you are busy. And this is not the most pleasant question to answer about your retirement savings. You have plenty of reasons to keep your stock and bond market investments as they are now.
Review your 401(k) investment management strategy now. Ensure that the largest part of your 401(k) account principle is safe later. Limit any catastrophic retirement plan account losses in the new year.
Historic stock market drops can be a manageable event. So can a dramatic rise in interest rates. If you know in advance how much risk, you are willing to take in your company 401(k) account.
Ric Lager
Lager & Company, Inc.
