Time to Spring Clean Your 401(k)

With spring comes in Minnesota the urge is to clean. Clean the attic, clean the garage, or clean the yard.

Your urge to clean may even follow you to work.  I would advise you to take the time to clean out your company 401(k) retirement plan account.

Most individual investors pay little attention to their company 401(k) retirement plan account.  Over the years, the mutual funds they own change companies and change names. Individual company 401(k) retirement plan participant can’t remember why they own the mutual funds they own.

Your company 401(k) retirement plan account should reflect the best mutual fund options available to you. This account should not be a junk pile of mutual funds that you know nothing about.

All U.S. stock market mutual funds have done well over the last five years. Record low interest rates have raised bond mutual fund values as well.

Individual investors can get away with not paying attention to their company 401(k) retirement plan accounts when the stock markets are rising and interest rates are falling. But nothing lasts forever.

Your recent company 401(k) retirement plan account statement gains are on paper only. The next stock market decline or interest rate rise can wipe out several years of investment gains in a few short weeks.

Your current company 401(k) retirement plan account holdings may not be the best options for you now. When the stock market risk level changes, your company 401(k) mutual fund holdings needs to change as well.

To remain fully invested when the stock market risk level changes never works. Think back to the failure of the buy-and-hold investment management strategy during the last great stock market decline.

The U.S. stock markets have begun their spring cleaning. Make sure that you are not left holding on to junk stock and bond mutual funds in your company 401(k) retirement plan account.

Ric Lager
Lager & Company, Inc.