The recent rollercoaster ride of the stock markets have caused many law firm administrators and HR Directors to serve as quasi-investment advisors for contributions to defined contribution pension plans. The Federal Reserve’s Survey of Consumer Finances shows that the average U.S. household invests 55% of its 401(k) assets in equities (common stocks and stock funds). This balanced approach is deceiving because the report also shows that there is a wide diversity among participants leading to an all or nothing approach. 20% of households allocate nothing to equities while 25% allocate their entire pension investment to the stock market. The group that avoids equities risks inadequate capital growth to fund their retirement while the full equity investors tend to make short term decisions that result in “buying high, selling low.”   Indeed, income and education have a direct correlation to allocation decisions with educated and higher salaried workers being more likely to have large equity investments. For a list of the characteristics of investors with heavy equity investments in their defined contribution pension plans contact Erica@LRGLLC.com.