Are You Sabotaging Your Retirement Account?
Recent studies show that 401(k) participants may be earning about half of what they could be earning and these lower returns can be attributed to bad investor decision-making. Below are 4 simple tips to help you make smarter choices with your 401(k) or other retirement plan at work.
- Don’t try to time the markets. Market timing involves making buy or sell decisions based upon a prediction of future market movements. Rumors can be misleading and cause a plan participant to make bad fund choices.
- Don’t trade a 401(k) plan account. Unless you have significant trading experience, it is not recommended to use your 401k as a trading account and can be a good way to lose your retirement savings.
- Do ignore newsletters and co-workers. Large 401(k) plans have employees share buy/sell recommendations on the investment options in the plan. Unless a participant can execute all of their recommendations when issued, they will be unable to replicate their performance.
- Don’t buy or sell a mutual fund based on emotion. Markets rise and fall and participants who panic when they fall should get help from a professional investment advisor. Many times, advisory fees are much less in comparison to what a participant can lose from making bad trades.