Stray 401ks

The bulk of American investors’ financial wealth is held in employer retirement plans, most prominently in 401(k)s.  Workers don’t remain with the same company through their entire career.  When they move on to greener pastures they often leave their retirement savings in their former employer’s plan.  That’s unwise.  I believe in “buy and hold” but not “leave and forget”.

It’s difficult to design and manage an asset allocation when one’s assets are spread across several accounts in different locations.   It is much better to consolidate stray 401(k)s into an IRA Rollover where the funds can be managed as part of a cohesive whole.  With the vast array of low-cost options available through Schwab, Fidelity and Vanguard it is a no-brainer to round up stray 401ks.

It’s particularly important during volatile times to have a soundly designed asset allocation populated with quality components.  Investors that consolidate stray 401ks now and put an integrated investment strategy into place will be much better positioned to benefit from the market recovery when the global economy heals.  In the long-term, much of the gains investors will reap will be the result of the manner in which they positioned themselves during these tumultuous times.

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