When it comes to 401(k) investing, it is always best to keep it simple. That is my main message to all individual 401(k) investors.
Mutual funds should make life simple. Many popular 401(k) mutual funds were founded in the 1920’s and 1930’s. For smaller investors who did not have tens of thousands of dollars to invest. And could not gain the attention of the large Wall Street firms.
But the 401(k) mutual fund menu world is the opposite. The current environment is like 401(k) providers frustrate 401(k) participants. And to discourage them from improving their investment management decisions.
It is difficult or impossible for 401(k) investors to figure out “what to buy” of their default mutual fund menu.
It should not be this hard. To figure out the best handful of 401(k) mutual funds to own. Regardless of the size of the default 401(k) mutual fund menu.
Most 401(k) plans offer a variety of mutual fund options. Active and passive. Small, Mid, and Large Value. And the same with Growth and Blend. International and Multi-national. And bond mutual funds of all shapes and sizes.
The result is an overwhelming list of mutual fund options. And the textbook example of “analysis by paralysis.” Too many choices. Hard to find information. No answers to the most basic questions.
And the results are predictable. Poor investment return outcomes for 401(k) participants. In most calendar years. Riding the stock and bond markets up-and-down. With no measurable preservation or growth of 401(k0 principal.
There are a few ways to avoid investment complexity. One of the most helpful tactics is to tune out the day-to-day noise of economic and market news. Particularly during volatile and uncertain times.
There is always something worrisome or panic-inducing happening. But making drastic portfolio moves in response is usually a bad idea. Not every economic or stock market headline requires a change in your 401(k) mutual fund holdings.
Another option is available. Independent, third-party, fiduciary level investment advice. Not affiliated with your 401(k) sponsor (your company). Or your 401(k) provider (Schwab, Fidelity, Empower, etc.).
A ranking of your default 401(k) mutual funds. By annual investment performance. And annual costs to own. A clear list of the best 401(k) mutual funds to own. In up, down, and sideways stock and bond markets.
Like your fantasy football team each week. Or your picks in the NCAA Men’s Basketball Tournament. Not difficult. The best 401(k) mutual funds to own jump off the page. The highest seeded 401(k) mutual funds are easy to find.
Less worry and anxiety. Increased confidence. Most likely, improved long-term 401(k0 preservation and growth.
What is not to like about 401(k) mutual fund ranking?
I have spent the last several years trying to figure out the best way to share my 401(k) advice content. I have tried Twitter, Facebook, company web site, and LinkedIn Groups. I now realize nothing beats a well-crafted newsletter delivered to your inbox once a week. Sign-up here.
Would you like you default 401(k) mutual funds ranked? If so, comment below. Let’s start a conversation. The preservation of your 401(k) principal might be at risk.
