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Thread: 401k

  1. #1
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    Default 401k

    Just signed up for 401K through work 3 weeks ago.

    They lure you in by showing you what you can get after X amount of years at 6% and 10% returns.

    So far as I have been monitoring mine it seems to be closer to 1%, some days it is losing money, not just the funds I picked but every fund they offer. I am doing better right now than a savings account but sure isn't 6% let alone 10%.

    Is this typical right now? Are your 401K's down right now? Should I expect some big surges to balance out the days where the funds are losing or making very little?

    Sorry if seemed like stupid questions, new to this and the group managing the 401K is useless. They didn't really explain any of it, just a quick teleconference.

    Their website is about useless as well. They show you gains/losses total but no graphing to show you fluctuations day by day.

    Only thing they have really is they list the share price for that day so I have been copying the share prices into excel each day so I have data to see what accounts they offer are losing and what accounts are gaining recently.

    I realize stock markets are not an exact science, but some idea on what to expect would be nice.

    Not really asking specific advice on funds so much as in general, what kinds of returns are you getting on your funds right now and should I expect some up-surges.
    Last edited by Rick; 07-18-2015 at 06:59 PM.
    “Absolutely, I can help, not just protection-wise but in the run game. That’s something that I take a lot of pride in,” Green said. “It’s something I feed of off. I love to hit. I’m smiling right now – just the thought of hitting somebody is a great feeling.”

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  3. #2
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    Subscribed. I don't know anything about 401Ks and I just committed to 3% of my pay just to see what happens.
    "Milk is for babies. When you grow up, you have to drink beer" -Arnold

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  5. #3

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    If they gave you the impression you would be getting 6-10% returns they were blowing sunshine up your butt.

    Mine probably grew 2-3% last year, and i actually lost $30 this last quarter.

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  7. #4
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    They didn't really tell me anything to be honest, they just have us this guide that showed what we would make at 6 or 10 percent return, didn't really tell us anything that we should expect as a real return.

    If you are getting 2-3 guess I won't freak out on the 1.5 I have had for first 3 weeks.
    “Absolutely, I can help, not just protection-wise but in the run game. That’s something that I take a lot of pride in,” Green said. “It’s something I feed of off. I love to hit. I’m smiling right now – just the thought of hitting somebody is a great feeling.”

  8. #5

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    Quote Originally Posted by Rick View Post
    They didn't really tell me anything to be honest, they just have us this guide that showed what we would make at 6 or 10 percent return, didn't really tell us anything that we should expect as a real return.

    If you are getting 2-3 guess I won't freak out on the 1.5 I have had for first 3 weeks.
    It's helpful to have good management. Some companies send your investment to a finance company who never give consultation to the investors. I don't know why, maybe those companies don't make anything on 401k...dunno

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  10. #6

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    The company who has my 401k just switched management companies, which I don't like. I was previously getting good returns with T Rowe Price. The returns haven't been as good since the switch. I'm probably going to send some paper work to T Rowe and ask then to take it back over, which is possible since I don't work for that company anymore.

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  12. #7
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    Returns are important, but you have to realize that this money is not to be touched for years. Meaning that it will ebb and flow with the market. We I started my first 401k, it was in 2002, right after the bubble burst in the tech industry. So everything I bought in my 401k was at some sort of low flash forward to 07 08 and 09. Lost a ton of money, but it was all on paper because nothing was sold.

    So yes it is possible to get 6 to 10%, but the market overall, here and internationally has to be doing well. You will more likely see that 1 to 5%, and probably some losses. But don't worry about it.

    What I did was looked through the funds and found stock and companies that I at least knew or heard of, or maybe was somewhat familiar with the industry. It made feel a little better about it.

    I don't know if you get annual raises. I do. So in my 401k I set it up to automatically increase my contribution by 1% each august.we usually get 3 to 5% raises, so it it makes sense for me to increase my contribution amount.

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  14. #8
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    I did 3% because my pay won't be consistent month to month due to a bonus structure so some months I may put in more than others. I won't get a raise until I'm promoted.
    "Milk is for babies. When you grow up, you have to drink beer" -Arnold

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  16. #9
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    Put the money in regularly as you are, and quit looking at it every day.

    Forget about it.

    Some days it will be up. Some days it will be down. But over the course of 10-20 years you should see significantly better growth in a stock fund as opposed to interest bearing accounts.

    But quit looking at it every day! Just forget about it. Look at it next year sometime if you absolutely have to.
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  18. #10

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    Quote Originally Posted by NightTrainLayne View Post
    Put the money in regularly as you are, and quit looking at it every day.

    Forget about it.

    Some days it will be up. Some days it will be down. But over the course of 10-20 years you should see significantly better growth in a stock fund as opposed to interest bearing accounts.

    But quit looking at it every day! Just forget about it. Look at it next year sometime if you absolutely have to.
    I look at mine quarterly

  19. #11
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    I rarely check mine. I do 4.5% because that's what my company matches. Almost makes the ROI insignificant at that rate.

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  21. #12
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    There is a new proposal from the Department of Labor (DOL).

    When it comes to investments, there are certified Fiduciary advisers and certified Brokers. A Fiduciary adviser is ultimately required to keep the investors interest above their own. That means that they can only provide investors information and make changes that support the investors wants and needs, and not their own (Fiduciary advisers cannot earn commission). A Broker on the other had, is only required to imply that a decision was made because the Broker "believed" it would benefit the investor (investor does the trusting while the Broker takes the risks).

    The so called purpose of the DOL proposal is to apparently reduce the loss investors by making Brokers follow Fiduciary rules as well as level the playing field between Big Corp Brokers and Independent Brokers/Financial Advisers.

    Unfortunately, this may be treating a symptom and not the problem.

    How many times have you seen articles where Banks or Big Corps get found guilty of risking investor's money to make profits while their investors lose everything? Each and every time, the fine the Government charges these Banks and Big Corps is always way less than the profits those companies made by making those self-interest decisions. In other words, those companies can afford to be caught while the smaller profile Brokers cannot.

    The small profile independent Brokers have to fully rely on their OWN name, reputation, and ability, to produce for their clients. They don't rely on ads in TV or papers. Their primary means to gain clients are by referral. These Brokers have something driving them to keep their client's interests at the forefront.

    Big Corp Brokers only try to get as many new Brokers, their family and friends, and any new clients they can bring in, just to get those investor's foot in the door.

    In 2008 or 2009, a couple things changed to benefit the Middle Class investors. One of those things was the minimum $$$$ investment amount by investors to utilize Active Management. Active Management along with research and data allows Brokers to recognize when the market is taking a big hit/dip and it allows them to immediately move an investor's $$$ to a more stable market to minimize loss.

    The minimum $$$$ amount investors had to invest before the 2008/2009 change was $500,000. Now, it is as low as $50 (which opened the door for just about anybody to take advantage of Active Management.

    Passive Management is what all Middle Class investors and below, have had to rely upon for decades. Passive Management handcuffs brokers and doesn't allow them to move $$$$ when the market takes a big hit/dip, which results in the investor suffering the loss.

    There are so many types of investments that all have their own level of risks. You can still bet that the higher the return, the greater the risks. Another good thing about Active Management is the investors actually has more control and more of a "say" in their investments (they can contact and tell their Broker to move their $$$ and the Broker has to follow through).

    As far as 401Ks through employment, the only thing I'd suggest looking out for is if there is an option for Active Management or is it all Passive Management (in other words, do you have to sit back and ride the wave).

  22. #13
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    A few things:

    1.) The most important thing you can do is be clear about what your investment goal is - if you are investing in a 401k to build your retirement nest egg for 10, 20, 30 years from now, then you will just make yourself crazy monitoring it everyday. Unless you're retiring in the next couple years, it doesn't make sense to monitor performance every day. Check them annually to make sure that they are still appropriate to meet your goal.

    2.) Make sure you are well diversified in your fund selection relative to your investment goal. Last year's investment winner is often tomorrow's loser. Don't chase yesterday's performance - checking the daily NAV will only lead you down the wrong path - you're better off looking at a fund's long term track record to see how it's performed in up and down markets. Most investments are measured on their 3, 5 and 10 year track records - those numbers will be more representative than their recent performance.

    3.) Having some historical context is important. The market has been going up mostly unchecked since the financial crisis of 2008. The fed injected trillions of dollars into the economy that had to go somewhere. We are in the late stages of a bull market (arguably) - the law of averages says there is a pretty decent likelihood that the market is not going to experience the same growth over the next 5-7 years that it's experienced over the previous 5-7 years - but if you take the long view, stocks have historically outpaced all other investment vehicles, so it's another reason to stay invested for your long term goals and not get too hung up on the day to day movements.

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  24. #14
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    Quote Originally Posted by artie_dale View Post
    There is a new proposal from the Department of Labor (DOL).

    When it comes to investments, there are certified Fiduciary advisers and certified Brokers. A Fiduciary adviser is ultimately required to keep the investors interest above their own. That means that they can only provide investors information and make changes that support the investors wants and needs, and not their own (Fiduciary advisers cannot earn commission). A Broker on the other had, is only required to imply that a decision was made because the Broker "believed" it would benefit the investor (investor does the trusting while the Broker takes the risks).

    The so called purpose of the DOL proposal is to apparently reduce the loss investors by making Brokers follow Fiduciary rules as well as level the playing field between Big Corp Brokers and Independent Brokers/Financial Advisers.

    Unfortunately, this may be treating a symptom and not the problem.

    How many times have you seen articles where Banks or Big Corps get found guilty of risking investor's money to make profits while their investors lose everything? Each and every time, the fine the Government charges these Banks and Big Corps is always way less than the profits those companies made by making those self-interest decisions. In other words, those companies can afford to be caught while the smaller profile Brokers cannot.

    The small profile independent Brokers have to fully rely on their OWN name, reputation, and ability, to produce for their clients. They don't rely on ads in TV or papers. Their primary means to gain clients are by referral. These Brokers have something driving them to keep their client's interests at the forefront.

    Big Corp Brokers only try to get as many new Brokers, their family and friends, and any new clients they can bring in, just to get those investor's foot in the door.

    In 2008 or 2009, a couple things changed to benefit the Middle Class investors. One of those things was the minimum $$$$ investment amount by investors to utilize Active Management. Active Management along with research and data allows Brokers to recognize when the market is taking a big hit/dip and it allows them to immediately move an investor's $$$ to a more stable market to minimize loss.

    The minimum $$$$ amount investors had to invest before the 2008/2009 change was $500,000. Now, it is as low as $50 (which opened the door for just about anybody to take advantage of Active Management.

    Passive Management is what all Middle Class investors and below, have had to rely upon for decades. Passive Management handcuffs brokers and doesn't allow them to move $$$$ when the market takes a big hit/dip, which results in the investor suffering the loss.

    There are so many types of investments that all have their own level of risks. You can still bet that the higher the return, the greater the risks. Another good thing about Active Management is the investors actually has more control and more of a "say" in their investments (they can contact and tell their Broker to move their $$$ and the Broker has to follow through).

    As far as 401Ks through employment, the only thing I'd suggest looking out for is if there is an option for Active Management or is it all Passive Management (in other words, do you have to sit back and ride the wave).
    I don't think your passive vs. active description is accurate.

    1.) Actively managed mutual funds have been around for decades - so active management and the ability for regular joes to invest in it is not a new phenomenon at all.
    2.) Historically, "middle class investors and below" have been more reliant on active management more than passive - which is also associated with higher fees than passive.

    The current trend is much more to passive/low fee index fund investing. Warren Buffet famously bet hedge fund managers that over 10 years a passive investment in the S&P 500 would beat any actively managed hedge fund - and at last check he was winning with a few years to go. There is real value in active management, but the problem is trying to find an active manager who is worth their fees.

    http://www.marketwatch.com/story/war...bet-2014-12-04

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  26. #15
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    I have no idea what a 401k is... is that like a retirement savings plan in the US? If it is, I currently invest 6% of my salary to this, and my company matches it... they will match up to 10%.

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