This Thanksgiving holiday weekend, you are very likely to find at least a few minutes of down time. Here is a quick idea to profit from those few minutes alone.
Review your current company 401(k) retirement plan holdings. Open your September 30, 2018 quarterly paper statement you received in the mail. Or log in to your company 401(k) retirement plan account website.
I would strongly advise you not to try both of these exercises at the same time. Don’t look at the September 30, 2018 value of your company 401(k) and compare it to the online current value. You may be tempted to call the local police to report a robbery.
If you view your company 401(k) retirement plan account online, find the column or the tab that lists past investment returns. You are very likely to notice a huge gap in past investment performance of at least one of your current company 401(k) retirement plan mutual fund holdings.
Find the mutual fund you currently own that has the worst investment performance. The best company 401(k) retirement plan investment strategy now is to sell that mutual fund and place the proceeds in the safety of the money market.
That’s right, shoot the turkey right now. Call the company 401(k) retirement plan provider’s 800 number, or sell the mutual fund online.
Most individual company 401(k) retirement plan participants own the same stocks and bonds in multiple mutual funds. This duplication of asset class and individual mutual fund holdings comes at the expense for little or no investment performance. You are not getting what you are paying for.
Worse, you have fully participated in the October stock and bond market decline. You most likely have little or no 2018 investment gains.
There is no need to own four, six, or more company 401(k) retirement plan mutual funds. Owning more mutual funds does not reduce your stock and bond market investment risk. All you do is to lower your investment returns.
Selling the worst performing mutual fund now will give you a money market balance to reinvest when the bottom of the current stock market decline arrives.
Do you enjoy the sale prices at your favorite store? Great. What do you have to have in order to take advantage of those sale prices?
You have to have the money to spend when the things you want to buy go on sale.
There is an upcoming sale on better mutual funds coming up on your company 401(k) retirement plan menu. Building a money market balance now will allow you to have the money to spend on the better mutual fund options that are on sale after the current stock market pullback ends.
Shoot the turkey mutual funds you own. Put the proceeds safely away in the money market account option. Get ready to shop when the stock market risk level is in your favor.
Ric Lager
Lager & Company, Inc.
