Retirement Plans At Work – Don’t Invest And Forget

Retirement plans at work. Do not invest in them and forget them!

If you work for a for-profit company there is a good chance you have a 401k plan. If you are a teacher, nurse, doctor, or other non-profit worker there is a good chance you have a 403b plan. Being in these plans means one important fact: YOU ARE AN INVESTOR! As an investor, you MUST become educated about your financial future !

I am a financial author and columnist; in addition, I am a consumer advocate for investor’s rights. It always amazes me how people who have 401k or 403b plans really do not take an interest in knowing their rights when it comes to their financial future.

Here is an example: If you go to a mall and buy a television, or clothes, or any other product and realize there is a problem with the product, you know exactly what your rights are and instinctively know what to do. You go back to the store with your receipt, tell the salesperson there is a problem, and ask for a refund. If the salesman says no you ask for the manager. If the manager says no you go all the way up the line until you get your money back. Yet, when it comes to your investments in your 401k or 403b plan, which could be tens of thousands if not hundreds of thousands of dollars, if there is a problem, most people do not know their rights or what to do. You MUST become an aggressive consumer with your investments the same way your are with other products and services!

Remember, after your physical health, your financial health is paramount!

What do I mean by being an aggressive consumer?

1. Know all fees, performance data, and investment objectives before investing. Don’t invest in a mutual fund just because your coworker is in it and says it’s good. You have your own investment objectives. More important, you probable have a different risk tolerance to losses.

2. Read prospectus before investing. Most average investors won’t consider reading a prospectus because it is too long and difficult to understand. When you speak to the plan sponsor ask them to review the prospectus with you.

3. Know exactly who to contact when you have questions about your 401k or 403b plan. It is important to contact your company’s plan administrator at least once a year. I suggest you contact them every time you receive your quarterly statement. Ask them to review your statement with you. Go over each investment. Ask them if any changes should be made. Usually everything stays the same and the whole conversation is usually less than five minutes. Make sure you put on the statement the date you called and the name of the person you spoke to. It might not mean anything now but it might be very important information in the future in case of a problem.

4. If your investment objectives, or life situation changes (you get married, divorced, widowed, change jobs, etc.) review and alter investments to ensure they reflect new realities. This is important.

5. Understand asset allocation and invest accordingly. As you get older the only thing that is guaranteed is that things change. One of those things that should chance is your asset allocations of your investments. Taking stock market losses is a reality when you invest in the market. It becomes a problem the closer you get to retirement because time to recoup those losses is not on your side.

If you do not think being an aggressive consumer when it comes to your investments is important, here are some facts. At the National Association of Securities Dealers (NASD) in 2006 investors who lost money and knew their rights and first mediated and then arbitrated, 87% got back part to all of their investment losses!

Be smart and be aggressive! The only person who really cares about your investments for your retirement is you!

Leave a Reply

Your email address will not be published.