Hope for Your 401k Account Producing Higher *Relative* Returns

Most 401(k) account holders are not aware that they could be achieving higher relative returns. This is especially true in a positive stock market environment.  There’s the famous saying, “A rising tide lifts all boats.”  The problem is your boat may not be not rising as fast as it could and also falling faster than it should when markets shift to a “falling tide”. In other words, your return, relative to benchmarks, or compared to a prudently designed portfolio, might actually be quite low! We suggest thinking in terms of two steps. By the way – both steps are equally important and neither step is done very well. Step 1 is under your control. Step 2 requires you to step outside of your comfort zone. Remember, though, it is YOUR money. Step 1: Grab the highest returns within the limitations of your 401(k) plan. Back to the “Rising Tide” idea. In investing you want to get full participation in the global market – in all the “rising tides” that are occurring. You also want to “fall less” when the rising tide turns to a falling tide. Diversification and low fees are the keys to both desires. Your victories that lead to winning the investment battle are small and numerous. An extra 0.5% gain here, and only dropping 0.5% when others dropped 0.8%. Day in, day out, those little victories put you in the winners circle. Be sure to get help from a registered investment advisor (RIA), if your plan has one. You want to get the deepest stock exposure possible around the world. Highest diversification, lowest fund fees. Sometimes “do it for...