March Madness and Your 401K


By Matthew Gaude & Shawn McGuire

March Madness has officially begun.  This is the time of year where novices and avid basketball fans fill out their brackets of 68 teams anticipating the big upsets as they pick the final 4 and eventual NCAA champion.  I must admit, I do not follow college basketball extensively, however this is always a time of year in college sports that I enjoy filling out my brackets to see if my methodology of picking "winners" comes close to the actual teams in the final four.

The NCAA began the process of seeding teams in 1979 as a way for the NCAA to make sure the strongest teams did not end up meeting each other too early in the tournament.  Seeding also provides a way for basketball novices that participate in completing a bracket to be able to make decisions based upon the higher ranked,  stronger teams down to the lower ranked teams. Besides, the probability of a #16 seed beating a #1 seed is statistically highly unlikely. In fact, it has never happened in the history of the NCAA tournament.

In addition, consider the following:

• The #1 seeded teams have won the greatest percentage of games, at 80%
• The top 1-3 seeded teams combine for a record of 997 wins and 368 losses, a winning percentage of 73.04%
• By contrast, the bottom 3 seeded teams (14-16 seeds) have a combined win total of just 32 games (or 7.48%) in 33 years of NCAA tournament history
• The National title has been won by a team with a #4 seed or higher in 30 out of 33 years

So how can the methodology you use to pick your brackets also be used to pick the investments in your 401K plan? Making sure you are invested in the right funds in your 401K is no different.  Similar to the college basketball seeds, you can rank your 401K investments from the best performing down to the worst performing investment for each asset class in your 401K.

One concept that the NCAA seeding process shows us is that 64 teams play each other to determine the best teams to make it to the Final Four. You should do the same analysis with the investments in your 401K plan. Conduct analysis to determine which Large Cap investments are the best when compared to each other, which Mid Cap Investments are the best when compared to each other and do the same for Small Cap, International and fixed income investments.

Another way to analyze the investments in your 401K is cost. How much is it costing you to own each of the investments in your 401K plan? Some of the time, paying more for something does not always provide better performance. Make sure as you conduct your analysis that you are taking into account the cost of owning that particular investment as well.

There is a high probability that you probably own one or several lower ranked investments in your 401K plan. Don't mistake an investment increasing in value thinking that it may be the best investment when we are in a favorable market environment the last several years. The investment performance may be far behind the investment performance of the higher seeds found on your company 401(k) retirement plan menu.

Long-term success in your 401(k) comes down to making sure you are owning the best and highest ranked investments available to you.  

Every March, we look forward to completing our brackets as part of the office pool. Don't let picking your brackets take more time than reviewing your investments and your 401K. Besides, your 401K will likely have a bigger payoff for you!

Head to head investment performance and cost comparisons can be made available to you by an independent, third-party, fiduciary investment professional.  If you would like a complementary analysis and investment rankings for your company 401K plan, please click here.


About Matthew

Matthew Gaude is an *investment advisor representative and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. Working first as a commodity broker and then as a Business Development Manager for a national broker-dealer, he has the insights and experience to help clients understand the complexities of the market and implement strategies to minimize risk. To learn more about Matthew, connect with him on LinkedIn or visit

About Shawn

Shawn McGuire is a financial advisor and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. He has worked in financial services since 2002 in positions ranging from financial advisor to stock broker and portfolio manager. As a CERTIFIED FINANCIAL PLANNER™ professional, he is trained to help clients with virtually all their financial needs. To learn more about Shawn, connect with him on LinkedIn or visit


Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc. (APA) and have not been reviewed by the form for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.

Securities offered through American Portfolios Financial Services, Inc., member FINRA/SIPC. *Investment advisory services offered through American Portfolio Advisors, Inc., a SEC Registered Investment Advisor. Live Oak Wealth Management, LLC is independently owned and not affiliated with APFS or APA.