How To Invest Like A Professional

Often, the employer is the only person at a company who believes that the company’s 401(k) or 403(b) plan is a good one.  That’s because he or she set it up and never took the time to learn what an optimal plan looks like. 

The word “optimal” means that a plan has low cost services (no hidden and camouflaged costs) and its core mix of investments match the market’s performance day-after-day; quarter-after-quarter; year-after-year. 

Easy!

The good news is this: Every employer can set up a plan that is optimal, and it will require not more than one hour of his or her time to set it up.  That’s what I teach employers to do, free.  However, most employers cannot fathom that their plan can be improved that easily, so they do the same old, same old and never even try something that is this simple and easy to do.

An optimized plan saves you money because its truly low cost. And it even frees up more of your time because it requires less time to manage and monitor. 

If the cost you pay for services is too high and if investig in no load, low cost, index funds is not an option, then you can ask your employer to improve your plan by cutting its cost and adding a core mix of index funds.  If your employer refuses to improve your plan (he or she may be stuck on stupid), then you may want to take the following action:

1. Contribute just enough money to get the company’s matching contribution.
2. Use a self-directed account (if your plan has that option) so that you can invest in no load, low cost, index funds.
3. Set up a low cost IRA account and contribute up to the maximum allowed by law.

Best wishes,

Your teacher, Frank Cirullo

Tags: 401k, 403b, IRA account

This entry was posted on Wednesday, July 23rd, 2008 at 11:28 pm and is filed under fiduciary, money, mutual funds, retirement plan, tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.