This sounds crazy but a lot of retirement account investors don’t know how much money they have in their retirement accounts. It’s even more common to not know how their retirement account is performing. I think I know why, and I’ll share a shocking fact that may change this ….
It’s funny that money is the only area where we let someone totally manage one of the very most important things in our lives but we don’t check to see if they’re doing a good job. And it sort of makes sense and here’s why…
I get it; we’re all busy. And when the finances are going well and the income is rolling in, it feels most important to focus on keeping those income streams. This makes a lot of sense.
But here’s the big reason I think we tend to neglect our retirement accounts and other traditional investments. When we pay someone for a job, that’s the checkpoint for measuring performance, right? At least this is true for me. Evaluating job performance happens when I write the check for the pool guy, or pay the graphic designer online. The money is going out, so my mind goes automatically to “let me check and see if this is money well spent”.
This is a natural time for making a decision for giving this person money and continuing to pay that person for the service they’re providing.
But what happens with our investment accounts? We don’t write the check or make the online payment in most cases because the payment for money management services is conveniently deducted from our retirement accounts or other traditional investment accounts…whether or not they are growing.
Here’s a shocking fact that I read recently in a revealing Barron’s article by Beverly Goodman entitled Why Laggards Stay Too Long. Based on a study, 401K mutual-fund administrators are more likely to put their own funds in the retirement plans they manage.
Here’s the really bad part; they tend to not remove poorly performing funds, and those funds underperform by an average of 3.6% a year. On a $200,000 retirement account, that’s $7,200 every year!
What can you do to protect and grow your money that’s in retirement accounts or other investment funds?
- Set regular quarterly dates to evaluate how all of your accounts are performing.
- Once a year, measure the performance of any investment that you have by comparing your fund’s performance to the performance of a related index, called a benchmark. (This is simple; it takes five minutes tops; it’s something I show my clients how to do.)
- Own that no one cares about your money as much as you do, and be a leader in your wealth accumulation.
- Know where your money is by knowing the very basics of investing. It’s just not rocket science. Don’t be intimidated by the lingo and the enormity of the topic. You only need to know a tiny fraction to be a leader in your wealth.
- Live from your goals. Know what you want money for. This will help you move beyond the sometimes mundane world of financial mumbo jumbo to the excitement and reward of creating the life you want. Isn’t that what money goals are all about?
If you have money in a retirement account or any investment account, you’ll definitely want to act on these few steps that will take about an hour a year. If you’re married and your spouse has a retirement account, all the more important that you take these steps to become a financially empowered woman.
If you enjoyed this article, you may also like my Money Goals article@ https://financialwoman.com/?p=6942