401(k) doesn’t require professionals

I must take exception to the comments on managing the Boeing 401(k) in the letter, “Managing 401(k) is a job for pros.” I retired from Boeing in 1999 and have kept my 401(k) funds in the Boeing program, currently managed by ING. There are nine Life Cycle Funds, five Index Funds, one Stable Value Fund, seven Sector Funds and one Boeing Stock Fund offered to investors. This may sound like a lot, but they are very straightforward and easy to understand. Outside of the Boeing Stock Fund, there are no provisions in the Boeing 401(k) to allow the participants to select “individual” stocks for their portfolios. So there is no reason to keep a “constant eye” on them. Yes, one should monitor their portfolio but this program is not set up to make you a day-trader. It is actually a quite conservative approach to your retirement investment planning.

The simplest and most conservative would be to put all your money in the Stable Value Fund. Historically, this fund provides for higher interest than a standard savings account and many CDs at your local bank. A bit more aggressive, but by no means a reckless investing approach, would be to pick a Life Cycle Fund corresponding to the year you intend to retire. These Life Cycle Funds invest in numerous mutual funds compromised of many, many stocks and bonds. In addition, the diversification (percentages of stocks, bonds and cash) of these Life Cycle Funds is automatically managed to become more conservative the closer you get to the retirement year. In essence, the employee can pick one of these Life Cycle Funds on the day he is hired and never have to touch (manage) it until the day he retires. These funds are specifically designed for the investor who does not want to actively manage his/her account and are very popular in the retirement investing world.

The other funds (Index, Sector and Boeing Stock) present a bit more risk/reward but also require more attention on the part of the investor.

Yes, there is risk involved in any investment, but the Boeing/ING approach to their 401(k) is designed to minimize investment risk and for the person who really does not want to be too actively involved. In actuality, this saves us from ourselves in trying to gauge the market. Most all Boeing employees are already participating in the 401(k) program. With the new contract, they will have some extra bonus money and increased company matching money to add to their existing 401(k). It is true that the new contract will put the employees’ retirements in their hands – but Boeing has provided a very simple and proven tool to manage that program and to allow even the smallest investor to participate in the market where, otherwise, he might not have that opportunity.

Tony Fortino