401(k) Investing

... or simply, investing in general.

I'm a believer in "tilting" away from the broad equities markets (Total [Domestic] Stock Market Index; Total International Stock Market Index; etc.) but it's of limited value if you don't stick with it.

Because if you have a stake in Small Cap Value funds (say), you have to understand they can underperform the broad market indices like the Total Stock Market for freaking YEARS. And when that happens, people usually bail out. They get discouraged, they get panicked, they LEAVE. Often at exactly the wrong time.

... When the Standard & Poor’s 500-stock index hits a record high ... we ought to be reminding ourselves of the near certainty of stock market declines that will test us just as the ones that began in 2000 and 2007 did. ...

Check your account statements as seldom as possible, especially when markets are falling.

We humans tend to experience pain from losses much more acutely than whatever joy we might experience from an equal-size gain. “If you’re watching as the markets go down, you are twice as unhappy as you would be happy if they went up by the same amount,” Professor Pagel said. “So looking at the market is, on average, painful.” ...

After years of investing, I've figured out there's a lot to be said for playing your investment stash down the middle and plunking your dough into an asset allocation fund. Vanguard's LifeStrategy Funds and Target Date Funds are both good choices; I'm sure there are others.

But if you want to deviate from the market, buying more small cap or mid cap or maybe even more Emerging Market funds, strive, to the best of your ability, to avoid tinkering with them. The easiest, least painful way to do that? Put the contributions into the funds on autopilot, and don't look at them on a daily or weekly basis. Don't even look at them once a month. Looking at your stash of investments every year or two is all that you'll need.