According to Nationwide Financial, the average investor with a 401(k) account earns on average a meager 3.4% return per year on their investments. Why is the success rate of the average investor so low? Do you know what you are earning in your account?
There are various reasons for poor results but these are some of the reasons:
The average investor enrolls with the 401(k) plan, selects investments based on data available, and never changes their allocation after the initial enrollment. In fact, 72% of investors never look at their account and never change their allocation. Employers typically set up programs with multiple choices of mutual funds. These mutual funds represent a variety of investment styles ranging from aggressive to conservative, international and domestic, stocks and bonds. Over time certain funds may perform well but others may underperform or lose money. While it is not important to look at your account every day, we do recommend that you study your account at least once per quarter and to make sure that you are invested in the best, most consistent performing funds.
If you do not know what your account is earning, perhaps you want to go onto the web site and review your account. The information is almost always there for you to review. In addition, the information and data about the investment choices is also there and you can reallocate your account to the best, most consistent funds. Keep in mind that you should always keep a proper investment allocation based upon your personal risk profile.
If you are not achieving good returns, get involved. If you don’t have the investment expertise, get help. Most employer sponsored plans have an advisor that you can speak with. It is your money and it is your retirement.
If you need assistance with your 401(k) or other investment needs, contact Richard Taylor.