Why are 401(k) retirement plans so dang confusing? And why can’t you get anybody to help you with it? Your employer isn’t qualified and can’t legally give you 401(k) investment advice, the plan provider wasn’t supposed to give you personalized investment recommendations because they couldn’t accept the fiduciary responsibility, and your usual stockbroker/financial consultant/investment advisor who takes care of your other investments doesn’t get paid to give you 401(k) advice – they just want the name of your HR rep so they can make a bid to win the company’s plan away from the current provider “the next time it comes up for review.”

And for heaven’s sake you’re not asking your brother-in-law again. He’s the one that convinced you to go “all international” two years ago.

Your 401(k) retirement plan is too important to ignore, so let’s put together a simple First Aid kit that will help stop the bleeding and start the healing. 

1. Dust off that statement buried at the bottom of the drawer and actually read it. (Perhaps with a nice glass of red wine. I’d suggest a pinot noir.) After you choke on the most recent account balance (let’s keep those sips small, please), look at your total contributions for the most recent period. And then for last year. Stopped contributing did you? Start putting money back into your 401(k) immediately. The key to 401(k) investment success is to keep that train running on-time all the way to retirement.   Especially if your employer offers a matching contribution.

2. Now, look for the summary of your current investments. Did you go “all cash” recently, putting your investments in a “Stable Value” fund or some such cash-like holding? Let me guess: you did that last November or maybe since the first of this year, huh? Now you’re agonizing on when to “jump back in.” Stop wringing your hands. And stop watching the market. Let’s put a retirement plan in place and then worry about something else. Like maybe the fact that you might be guzzling that wine just a bit.

3. Don’t try to create a “secret sauce” of 401(k) mutual fund holdings. If you’re not a sophisticated investor and you have holdings in more than five mutual funds, you’re probably making this harder than it needs to be. When we start cobbling together 5% of this fund and 7% of the other and so on and so on, we kind of hope we’re putting together some sort of magic mix, don’t we? So, how’s that been going for you?

4. Look for a pre-fab “allocation fund.” Now, the experts (who don’t like to make such matters simple, because then they’ve got nothing to do) can whine all they like about these, but the fact of the matter is, an investment mix that minimizes risk and maximizes opportunity is the best you can do – and that’s what these funds try to do. These “fund of fund” choices build a portfolio for you, rebalance their holdings regularly, and keep you out of the ditch. Look for mutual funds with names like “conservative” or “moderate” or “moderately aggressive”. They may have additional abbreviations like “INV” or “ALLOC” as a part of their names. Determine your appetite for risk and then make an appropriate choice. Pick one. Just one. No secret sauce, remember?

5. Clean up the leftovers. When you call your plan provider with the modifications to your investment allocation, remember to make the same changes to past and future contributions. That way you don’t have all of these little leftover bits and pieces of mutual fund holdings cluttering up your statement. See the $43.32 you have in the Small Cap Growth Fund? That’s the one your brother-in-law was touting back in the DotCom Days. Let’s mop up that little mess.

6. I know you want to hold company stock in your 401(k), but don’t. Seriously, do we have to talk about that these days?

7. And finally, don’t crack open the piggy bank. Do not yield to the temptation to take out a loan on your 401(k) and don’t cash-out if you change jobs.

Now, that’s done. How about we put away the wine and I make you a pot of coffee?