Company 401(k) retirement plan providers are not required to disclose information to individual company 401(k) retirement plan participants on many different levels. Nowhere is that more evident than when investment performance numbers are reported every calendar quarter.
Reporting investment performance never takes into account how much risk has been taken by an individual company 401(k) retirement plan participant in order to get that investment performance. Linking investment performance to investment risk would make individual company 401(k) retirement plan participants.
Before the U.S. stock markets go through another 2008-2009 event, there needs to be steps taken by individual company 401(k) retirement plan participants to better understand how much risk they are taking now in their company 401(k) retirement plan accounts.
Short-term stock market losses are always part of stock market risk. Losing 40-50% of your company 401(k) retirement plan account should never happen again.
Take the time now to fully understand how much on your company 401(k) retirement plan dollars are at risk in the next great stock market decline.
Your recent all-time-high company 401(k) retirement plan statement is really paper money. It is a picture of how much money you think that you have. Much more important to your long-term retirement is how much of your recent years of stock market gains are preserved prior to the next great stock market decline.
Five-plus years of stock market gains are great. Don’t take the chance of revisiting the record stock market losses from six years ago.
You insure your home. You insure your car. What is the next largest personal asset that your currently own?
Don’t let your current investment advisor hide behind a pie chart when you ask about stock market risk. If that same investment advisor begins to talk about R-squared, standard deviation, beta, or the Sharpe ratio be especially concerned.
Ric Lager
Lager & Company, Inc.
