Americans have an obesity problem, but it's not the one hanging over their money, it IS their money belt. Well, in the era of recession redux, it's not actually their money belt, it's their retirement portfolio. First, far too many mutual funds they invest in have exceeded the optimal number of securities in their portfolios (see "Overdiversification and the 401(k) Investor – Too Many Stocks Spoil the Portfolio," FiduciaryNews.com).
Academic research shows the optimized portfolio contains perhaps 30-40 stocks, while the typical mutual fund has 100 or more stocks. In fact, it's downright hard to find a good array of mutual funds with only 30-40 stocks.
Compounding the problem of mutual fund obesity is 401(k) obesity. Today's 401(k) plans, in a far cry from the three simple choices of the 1980's, often present an overabundance of investment options to employees.
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
