Beware 401(k) Recovery Schemes ~ The Risk Averse Alert

Sunday, November 02, 2008

Beware 401(k) Recovery Schemes

I get my fair share of e-mail from various financial publishers. Seeing what's being promoted to those whose retirement savings have taken a big hit in '08, I am compelled to give fair warning.

There is one thing I see offered in common. It is "the next best thing" you need to get on board if you are to rescue your financial future. This could be investing in high-grade corporate bonds or the "New Silk Road" railroad. No matter the vehicle, the promise is the same. You can take the risk out of long-side investing, and thereby protect your retirement savings.

Financial publishers being financial publishers, what else do you expect?

Let me ask you. Is it necessary you always have your capital at risk? Must your 401(k) savings always be invested in something promising exceptional returns?

Or might there be times when you are better off simply protecting principal?

I ask, of course, because I believe now is one such time when you probably are the wiser to forgo risk. Indeed, this has been my published position since May. Regrettably, not everyone who could have benefited got the message. So, I put forward a 401(k) plan of action a couple weeks ago.

You ought consider this plan before entertaining any other proposal for recovering 401(k) losses you have suffered this year.

Look, I am not about bashing alternative investment ideas. To everything there is a season. Yet yesterday's unvarnished perspective stands as a cautionary warning...

Beware the lure of quick fixes when the smart thing to do is protect principal.

Get Your 401(k) Plan of Action

If you follow the course I recommend in 401(k) Guidance From Warren Buffett, Jim Cramer, and Me, then you still will need a plan of action for eventually posturing your 401(k) in capital preservation mode. Get my simple solution...

Send an e-mail to:

Subject: 401(k) SOS

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© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.

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