When your career keeps you busy, it's hard to find the time to manage your investments. Many new clients have told me they had not changed the investments in their retirement plan in years. I commonly find that many of their funds have changed managers or been merged into funds with different objectives. It is easy to end up with an account being managed by people don't know anything about. If your investments are hardly working, here are some changes you can make to get them to work harder.
Where To Start
Start by looking at any retirement accounts you have with former employers. Many of the mutual funds in an employer's retirement plan are there only because they pay a fee to be on the list. When you leave a job you can move your account to a firm that can let you invest in funds that refused to pay the fee.
In researching the Greatest Fund Managers for Forbes, I found that nearly all of the mutual funds that made the list do not pay the fee and so are not available in many employee sponsored retirement plans. I don't pay the fee either so Marketocracy managers are not available through any employer sponsored plan. The sooner you can get out of your former employer's plan, the sooner you can put some great managers to work on your account.
What About My Current Employer?
Ask your current employer if your retirement plan allows for a "brokerage window". If your plan does not offer any of the greatest mutual fund managers, you may still be able to invest in them through a brokerage window, though Marketocracy managers will still be unavailable. You may have to pay a commission for each trade. But when you consider the difference it could make over your career between using fund managers who paid the plan provider instead of the greatest mutual fund managers on my list, it is well worth a $10 commission.
Nevertheless, to minimize the commissions, you may want to have each paycheck's retirement plan deduction deposited in a money market fund. Then once a quarter invest the proceeds in the funds you prefer through the brokerage window. This way, you don't pay a commission every paycheck, just once a quarter.
Managing A Portfolio
Once you've taken care of your tax-advantaged accounts, take a look at your regular investments -- the one's on which you have to pay taxes each year. Managing a portfolio is a passion for many people so they don't mind committing the time to do it well. However, investment skill is rare. There are more great musicians, athletes, and surgeons in the world than there are great investors. In addition, it takes a long time to develop investment skill even if you have raw talent.
For those whose talents, skills and training lie outside of investing, it makes sense to use great managers at least until they have developed their own investment skill.