Investing the easy way

lan Greenspan really ought to buy all of us 401(k)-type investors lunch some time.

The Fed chief is charged with keeping our economic boat steady. Retirement-plan devotees, more likely to adjust investments annually than hourly, make that easier.

We're stable. Speculative, in-and-out stock traders, in contrast, just grow more unpredictable whenever the market gets rocky. That fuels a cycle of volatility.

Nothing wrong with chasing the odd hot stock. But it's a risky route for retirement dollars. Compare it with socking away up to $10,500 of pretax earnings a year in a well-allocated portfolio.

That's why the 401(k) is huge.

If sticking to a long-term investment plan sounds stodgy in an age of perpetual motion (up next: wireless trading!), the approach has well-credentialed backers.

Take John Brennan, who heads the Vanguard Group of mutual funds. "I don't even look at my accounts," he told Dow Jones News Service last month. "I will not react to market ups and downs."

Quick-shifters may call that predictable for someone selling funds. Others may feel solidarity.

It's easier for most of us to get educated on 401(k) investing than to be Einsteins on the nuances of individual company performance.

But it's not just "investing on autopilot." And - surprisingly - not even the fundamentals of the 401(k) are widely understood. Consider a survey last month of self-described "retirement investors" by J.P. Morgan/American Century Retirement Plan Services.

Sixty percent of 750 respondents couldn't list these benefits of 401(k) plans: they lower taxable income; the money in them grows tax-deferred; and many companies match employee contributions.

Today's lead story may help.

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