Are you trying one of these bad ideas to boost your 401(k) plan?

Mitch Strohm picture

Many of us worry that our retirement savings aren't growing fast enough.

But two new reports provide a troubling look at how investors – including some who definitely ought to know better -- are turning to a couple of risky old ideas to goose their 401(k) plans.

The first comes from today’s Los Angeles Times, which reports that Baby Boomers are day trading with their retirement accounts.

These investors, the Times reports, are fed up with the conventional buy-and-hold strategy after enduring two hellish bear markets over the last decade. Instead of sticking with tradition, they are taking a gamble with their nest eggs and hoping for the best.

It's no wonder investors are anxious. Retirement plans certainly have been pounded over the past 10 years. According to Aon Hewitt, the average 60-year-old has only about $114,500 in their 401(k), and half have less than $37,300.

That's not a lot to survive on post-retirement.

But not a lot of investors are changing their plans. Aon Hewitt reports that only 15% of investors made changes to their 401(k) last year.

Still, those close to retirement may be inclined to try day trading. Low estimates have sparked a new industry – advisers praising the profits of trading retirement accounts.

I simply can't see why anyone would ever day-trade with their retirement funds. It goes against the main goal of 401(k) and IRA plans. Even experienced experts say that, for the majority of people, day trading is just too risky. At some point, it's almost like taking your money to the casino.

Diversification is the theme of the second blunder today.

Wall Street employees lost $2 billion last year by investing their retirement savings in their own firms, according to Bloomberg Businessweek.

"Wall Street employees, who dispense financial advice to individuals and companies, aren't following a basic investing tenet with their own money: diversification," reports Bloomberg.

Employees at Wall Street's five biggest banks had 401(k) plans that were invested heavily in their own company stock, even after the fall of Enron back in 2001 sent out a warning to all investors not to do this.

Bloomberg reports that Bank of America Corp. employees lost the most due to a 58% stock drop last year. The losses came out at $1.37 billion.

Before the federal Pension Protection Act of 2006, employees were sometimes required to hold employer shares. That's not the case anymore.

You have to wonder what these Wall Street workers are thinking. If they can't handle their own money, how are they supposed to handle ours?

"Still, financial workers are receiving more of their pay in stock," reports Bloomberg.

This all brings to light the fine line between ignoring your portfolio and paying too much attention. It's where finding a solid financial adviser with extensive experience can be of great value.

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