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3 Lessons The Facebook IPO Can Teach You About 401(K) Investing

During the past several weeks, our advisers have addressed one question over and over with our members: should I buy Facebook?

The Facebook story has further unfolded during the two weeks since the IPO - Initial Public Offering - on May 18th when the company became publicly traded.

Of course the story hasn't exactly played out the way many pundits expected. The level of enthusiasm coming from some camps was simply the latest example of emotions-driven investing gone wild.

There's no question the Facebook story is a great one, but the substantial wealth Facebook's founders produced for themselves didn't appear overnight. The company's success created an illusion, for some investors, that the IPO would give the everyday investor an instant pathway to wealth and prosperity. And, let's be honest, the desire to get-rich-quick is a natural part of the human psyche. We'd all love to hit the jackpot, but gambling isn't investing.

There are a few reminders we can take away from the whole Facebook IPO affair:

1) Don't get caught up in the hype and emotion of the stock market. Avoid the expectation of overnight success. Remind yourself that short-term, emotions-driven investing is more like a weekend trip to Vegas and less like well-researched retirement planning. Instead, create a long-term investing strategy based on your individual situation. Invest in mutual funds from the asset classes that are appropriate for your retirement strategy. This well-planned diversification will allow you to avoid the stress of often-dramatic swings in the price of a single company's stock.

2) Planning for retirement takes work and a strategy tailored toward your goals. Do your homework in order to determine the best course for you; an appropriate plan is essential. If you're not comfortable creating your own plan, talk to someone who offers retirement planning services and isn't trying to sell you on a specific product.

3) When retirement investing is involved, think long-term. It will help you zone in on your investments' real value. Preparing for all possibilities is important; you or your adviser can do so by creating an appropriate long-term strategy. Then check in on your retirement investments quarterly. And, just as companies like Facebook evolve and adapt to different business environments, your 401(k) investment allocation can be adapted so it continues to fit your long-term strategy. You'll want to revisit your strategy yearly to ensure it continues to fit your goals, risk tolerance and time line to retirement.

If you want to discuss your long-term retirement strategy or have other 401(k) investing questions, call our adviser team at 877-627-8401 or email us at

Your Turn:

Have you learned any lessons from the Facebook IPO or any other high-profile IPOs? Let us know in comments section below and speaking of Facebook, be sure to 'Like' Smart401k so you can follow all our commentary.

Andrew Thomas

Smart401k Associate Representative

Photo credit: Robert Scoble

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at