“When the facts change I change my mind. What do you do sir?”
– John Maynard Keynes
Listening is one of the hardest things to do. There are multiple daily obstacles that interfere with really paying attention to the most important things in our lives.
Company 401(k) retirement plan accounts are the largest single piece of investment assets for the majority of individual investors. But you would not know that based on their inattention to changes in the stock and bond markets.
The stock and bond markets are logical and organized entities. But individual investors are emotional and fearful about their money. Human emotions often get in the way of managing money.
A common problem for individual company 401(k) retirement plan participants is that they don’t know who to listen to regarding their investment management decisions.
Individual investors are always best served by listening to the stock and bond markets directly. The problem is that most individual investors have their investment management minds made up most of the time.
The U.S. Federal Reserve Board raised interest rates last week for the third time this year. This rise was the eighth time in a row that interest rates have gone up since mid-2015.
Do you know what happens to the value of bond mutual funds when interest rates rise?
Do you know how much exposure to bond mutual funds you currently have in the target date mutual funds you own in your company 401(k) account?
Pay more attention to your company 401(k) retirement plan account now. Listen to what the stock and bond market are telling you. Don’t allow the mutual fund companies to make your company 401(k) retirement plan investment management decisions for you.
More importantly, don’t let your company 401(k) retirement plan account mutual fund managers fail to make investment management decisions that cost you the last several years of both stock and bond market investment gains.
It is always a good day to be 100% invested in stock and bonds according to the mutual fund companies. What else would you expect them to promote? Your money 100% invested at all times is how they make the most investment management fees.
The greatest threat to the long-term preservation of your company 401(k) retirement plan account is not having a plan in place when the stock and bond market change directions.
Having a plan in place that’s been well thought out in advance of the next stock or bond market decline is the equivalent of company 401(k) retirement plan account insurance.
You can survive whatever comes next. Your survival depends upon taking the time now to put in place a plan to manage your company 401(k) retirement plan account stock and bond market risk.
Ric Lager
Lager & Company, Inc.
