In the aftermath of the Great Recession, the biggest asset that is owned free and clear is often a 401K or IRA. Unfortunately for investors, most of these 401Ks and IRAs are invested in cookie cutter mutual funds or ETFs, which stack the odds of even keeping up with the market against them. Did you know that roughly 75% of mutual funds underperform their benchmarks? If you have multiple mutual funds, the odds just get worse! Many of these investments are allocated to these mutual funds not because they are high quality investments, but instead because there is a limited selection in the 401K program, or the individual picking the funds doesn’t have the time or expertise to focus on maximizing risk-adjusted returns. Imagine instead of using cookie-cutter mutual funds, your portfolio was tailor-made specifically for you, with each stock meeting the deep value requirements of an experienced and prolific money manager. Every security will be hand-selected and monitored specifically to meet your needs and investment objectives. This provides you with much more protection and confidence in what you are invested in. Also, you’ll have access to strategies such as covered calls and cash-secured puts, which most mutual funds can’t offer, but can provide huge amounts of protection in a bear market.
Fortunately, there is a solution.
1) If you are over 59 ½ years of age, your 401K or 403B can very likely rollover into an IRA with no tax consequences or penalties. This will open the door for whatever type of investment that you are interested in, instead of being hamstrung by a limited selection that has likely been picked by an administrator or HR department that has higher priorities than maximizing your risk-adjusted returns on your retirement.
2) If you have a 401K from a former employer you can most likely move it with no tax consequences or penalties.
3) IRAs can be moved at any time so don’t settle for mediocrity. We are in year 5 of a bull market and most mutual funds are 100% long stocks and bonds. The market is very expensive and interest rates have nowhere to go but up. Now is the time to take profits on mutual funds and roll into a more dynamic investment program like T&T Capital Management can provide.
Don’t wait until the next bear market to make a change. Remember what 2000 and 2008 felt like? If you are a Baby Boomer looking to protect profits and generate income, being long mutual funds is not likely to be a recipe for success moving forward with market valuations being 15-20% higher than historical averages in a low growth environment. Junk bonds are yielding around 5.2%, which is not adequate considering the level of interest rate and inflation risks that are present given the Federal Reserve’s policies. Call your Retirement Specialist today at 949-630-0263 to discuss how we can help you and go over what your options are!
Here is a link to our performance report for you to review and compare as well. Keep in mind past performance is not indicative of future results of course.