Sophisticated readers of blogs realize that technology has affected every part of their business and personal life. Technology has also improved how investment management decisions are made in a company 401(k) retirement plan account.
Most individual company 401(k) retirement plan participants don’t have the time or the interest to understand their company 401(k) retirement plan menu of mutual fund options. Family, friends, and career all come before investment management decisions.
An independent, third-party investment advisor can use technology to analyze the three most important levels of company 401(k) retirement plan investment management. This information summary helps improve investment management decisions and long-term investment returns.
The first level of company 401(k) retirement plan investment management is the current trend of the stock and bond markets. These trends have not changed for the last several years. Interest rates have trended down to almost zero. The stock market has risen for the last six-plus years.
Trends eventually change. Interest rates will rise and stock markets will fall. The evidence of a change in trend is easy to see using current technology. Recognition of trend changes can help preserve several years to stock and bond market investment gains.
The second level of company 401(k) retirement plan investment management is the understanding of the best type of mutual fund options to own. Each company 401(k) retirement plan menu has large, mid and small cap mutual fund sizes. These mutual fund sizes are further classified into value, blend and growth mutual fund styles.
The bond mutual fund options on a company 401(k) retirement plan menu are short, intermediate and long-term bond mutual funds. Each of these options carries a different level of risk in a rising interest rate environment.
Today’s investment management technology can provide the optimal combination of mutual fund diversification. Your 80-20, 60-40, or 50-50 stock-to-bond market risk levels are can be properly categorized for each individual investor.
The third level of company 401(k) retirement plan investment management is to understand “what to buy.” Knowledge of what individual mutual fund option to own on your company 401(k) retirement plan menu can add a huge amount of investment performance.
The investment management decision to own Fund A versus Fund B is where most individual company 401(k) retirement plan participants struggle. Investment management technology tools today make that process as easy as finding the white marbles in a box of black marbles.
These are the levels of the required investment management decisions in your company 401(k) retirement plan account. Technology can help slow the process down for you and make the investment management decisions easier to understand.
Ric Lager
Lager & Company, Inc.
