Who is Watching your 401(k) Plan?

The answer is probably, "you are."

For many Americans, I am pretty sure that this is a problem. If you've got a job at a decent-sized company and have been working for a while, your 401(k) plan is probably your second biggest asset after your home. Let's say your 401(k) has $200,000 in it. If your best friend had an investment account with $200k in it, would you feel qualified to manage it? If your answer is "no", you probably should seek some help with your 401(k) allocations.

At Marketwatch a while back they put up a troubling article outlining some common mistakes that are being made by American savers. The biggest one in my opinion is the amount of money that people are investing in their own company's stock. The correct amount is zero (some matching programs make this more difficult). As an employee, you are totally dependent on your employer for your monthly income. You have the choice to not rely on them for your post-retirement income. Take it.

My Advice?

First, do not select the company stock option from the menu. Second, if your employer has a matching policy, maximize the benefit you can derive from it. Third, do some research on asset allocation and don't be afraid to ask for help.