The first bear market since 2009 shaved 20% off the S&P 500 stock index in the January-thru-March quarter. Your $100,000 401(k) account balance on January 1st was worth $20,000 less on March 31st.
You have read all the online financial services industry articles that instructed you to “not panic, do nothing, don’t sell, your company 401(k) mutual funds,” I thought now would be a perfect time for your reality check.
If and when you find the time, courage, and intestinal fortitude to open your March 31, 2020 company 401(k) retirement plan account statement recently received in the mail, here is your new reality.
You lost a lot of money the previous 90 days in your company 401(k) account. Don’t take the time to figure out how much money you lost since February 19th. The local hospital is already under siege.
Your reluctance to look at your company 401(k) account statement is entirely normal. Losing money is painful. Losing giant amounts of money from recent stock market all-time high levels is even more painful.
In addition to having less money for your retirement savings, you might also feel foolish. If you are old enough to have lived through the 2008-2009 stock market crash, you may even feel “fooled again.”
The most important investment management decision you need to make now is to forget about your ego and personal feelings.
Your inaction in the past has clearly put your company 401(k) retirement plan savings at undue risk. Now is the time for action. Specifically, an action you most likely have never taken in all the years of trying to manage your company 401(k) retirement plan account on your own.
What would have been the best company 401(k) retirement plan account you could have made after the last great stock market crash that ended in March 2009?
Two things. First, you could have sold the worst-performing mutual funds you owned at that time. Second, you could have reinvested those proceeds into the handful of best mutual funds found on your company 401(k) retirement plan menu.
Fight the urge to get out of the stock market completely. Instead, sell your biggest losers, and put the proceeds into better mutual funds.
Nobody knows how long this bear market will last. The bear market will put in a bottom shortly after the coronavirus headlines die down.
And this current stock market decline, there will be eventual record highs again. The new record highs in your individual company 401(k) retirement plan account will come sooner if you upgrade your mutual fund holdings right now.
Ric Lager
Lager & Company, Inc.
