When it comes to managing your company 401(k) retirement plan account, there are only three investment management strategy options.
First, you can ignore the trend. This is the preferred investment management strategy for the vast majority of individual company 401(k) retirement plan participants. They pay no attention at all to the economic, stock market, and interest rate trends.
Company 401(k) retirement plan providers promote the “buy-and-hold,” investment management theory. Asset allocation and diversification are the investment management tools of choice. These text book investment management strategies promote that over a 50-year investment horizon, a buy-and-hold investment management strategy will likely work out.
I have been an investment advisor for 31 years. I have never had a client who had 50 years to protect and grow their company 401(k) retirement plan account.
Second, you can try to predict the trend. The internet and financial news media provides more than enough experts who will tell you the next big direction of any investment.
Predicting anything is hard. Predicting investments is next to impossible over the long term. The other problem with predictions is that there is no investment management game plan in place when the prediction goes against you.
Third, you can access several independent, third-party tools that will rank your current company 401(k) retirement plan menu options. From there, you can pick the mutual funds that offer the best investment performance and reflect the level of stock and bond market risk that you want to take.
These ranking tools adapt to the economic, stock, and bond market changes. Trends can change quickly and violently; you want to be able to adjust the levels of your company 401(k) retirement plan risk.
You don’t have another 50 years to manage your company 401(k) account. And you don’t have to predict anything. The most important company 401(k) investment management decision to make is how to best avoid the pain of riding the stock market up, and then back down again.
Stay aware of the trend. Pick your investments. Manage your risk. Change as necessary.
Ric Lager
Lager & Company, Inc.
