The stock market can help your 401(k) but it can’t keep it

I love the U.S. stock markets. Over the last 34 years, the long-term upward growth of the popular stock market averages has made my individual company 401(k) retirement plan participant clients a lot of money.

The stock markets go up most of the time. But you have a principal preservation game plan in place for the hand full of times in your working career when the stock markets try to take away several years of investment gains.

The math of the last two stock market declines can help make my point. Here are the real S&P 500 investment return numbers from the last two great stock market declines.

In the 31-month period from March 2000 to October 2002, the S&P 500 declined over 49%. It took an individual investor 87 months to “get their money back.”

The last great stock market decline was the 17-month period from October 2007 to March 2009. During that time, the S&P 500 declined over 56%. The time to ‘get your money back” after that disaster was 65 months.

Stock market investment gains in company 401(k) retirement plan accounts can best be defined by an old Wall Street TV commercial from several years ago.

“It’s not what you make, it’s what you keep that matters.”

Start thinking about a company 401(k) retirement plan account principal preservation game plan. It is only a matter of time before the next great stock market decline tries to take away your retirement assets.

You already have the investment gains. You need to think about how to keep them.

Ric Lager
Lager & Company, Inc.