401k Investing for Newbies and Nerds
There are one hundred and thirty million American workers who collectively own $35 trillion in their 401k and related retirement accounts. The owners of these accounts face both challenges and opportunities. The largest opportunity is that their accounts are investment accounts, not savings accounts, and for the past three decades they have grown in the low double-digit range.
The main challenge 401k owners face is that there are required to make their own investment decisions by choosing from a limited menu of mutual funds.
These 130 million self-directed retirement account owners can be divided into 3 distinct categories. The first are those who could care less about their money and are willing to just let nature take its course. The second group, NEWBIES, are inexperienced in the investment process, but are willing to become engaged in the management of their hard earned dollars. The third group, NERDS, are those who have a modicum of investment expertise and are willing to devote the time and energy to expand their investments skills.
The mission of my podcast is to motivate and educate 401k NEWBIES and NERDS on how to optimize their 401k experience. I have a 62-year relationship with the stock market. I have been a stockbroker, finance professor and individual investor. Ten years ago, I appointed myself to the position of 401k guru extraordinaire. I have no investment products to sell. All I have to offer are the objective observations of one who has been there and done that.
401k Investing for Newbies and Nerds
Season 1 Episode 19 The Weatherman, Tariffs and your 401(k) Plan
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In this stop on my 62-year journey along Wall Street, I discuss the evolving nature of the stock market. Today’s market is not your father’s market. Sixty years ago, less than 3 percent of the American public owned stock. Today that number is north of sixty percent and growing. Sixty years ago, Wall Street brokers were the gate keepers to the equity markets. Today, eighty million American investors make their own investment decisions using discount brokers and index funds. And outperform the pros, to boot!!
The fees charged by the Wall Street mavins are based upon their alleged ability to predict individual stock prices and market movements. After six decades as a stock market observer and participant, I have concluded that Wall Street analysts and TV weather people are distant cousins.
We are about to enter the Q2 earnings report season, and according to Yahoo Finance, investors are waiting with bated breath for the release of those numbers. In this episode, I discuss Wall Street’s ability to predict stock prices and market movements and comment on their usefulness.
The episode concludes with observations on how 401(k) participants can leverage the 401(k) infrastructure to outperform the Wall Street pros.