401k and 403b bloggers helping each other...

401k LIKE BREADCRUMBS?

Fri, 16 Oct 2009 12:56:12 -0400

Are you leaving your retirement funds in an old company’s 401k plan? Then perhaps you don’t understand what can happen. It’s entirely possible that your funds may not be there when you return for them and when you need them most. And it’s entirely LIKELY that you are paying way too much in mutual fund fees which are being used to support your old company’s 401k program.

Haven’t we all learned our lesson from Enron, Global Crossing etc? If you haven’t then perhaps I could suggest a movie for you. You need to go out and rent Jim Carey’s 2005 movie, Fun with Dick and Jane. It is an excellent spoof which aims a spear right at YOUR heart, because YOU have not learned that your government can not prevent fraud, they can only prosecute fraud. The movie portrays how all the employees of the fictitious GlobaDyne Corp lose their 401k investments to a fraudster CEO. This may be a spoof, but employees of Enron, Global Crossing and many other corporations have felt the very real pain.

Even if you don’t think it could ever happen to you, or the beloved corporation you used to work for, you should at least consider the extra fees you are paying just to keep your money in a 401k plan. You could invest in the very same mutual funds through an IRA with Warren Financial, and instead of paying the mutual funds 1.8% or 2.03% you would pay the lowest possible rates, more like .93% and 1.02%.

How to... SAVE my money NOW !

Wed, 17 Dec 2008 11:56:55 -0500

No, you can’t take your money out of the company retirement program and stick it in your mattress. You can’t even buy gold in your retirement plan (although you might be able to buy a gold fund that invests in gold and gold miners, but that’s not exactly the same).

The bottom line is that when you want to hold onto the balances in your retirement fund, you need to search among the holdings and find a fund that is essentially a conservative bond fund, or even a money market fund.

These money market funds are many times labeled “Stable Value Fund”. Normally, that’s code for “money market fund”.

A money market fund is a fund that has a per-share value of $1 and will always have a per share value of $1, so there is no fluctuations at all.

The only benefit to holding such a fund is the interest rate you will receive which these days is probably around 1.5-2.5%.

But even if you convert all your holdings to a money market fund, you probably do NOT want to change your contributions to go into this money market fund. Remember, one of the beautiful things about your retirement program is that you are regularly contributing to the fund. In essence, you are dollar cost averaging your contributions and buying shares in really cheap mutual funds at very low prices. And eventually these funds will come back and the purchases you make during these dark days will look very good to you in a year or two or three.

Retirement cut in half??

Wed, 17 Dec 2008 11:07:39 -0500

As we near the end of 2008, looking back we see a year that has treated investors with scorn. Many investments have been cut in half this year. And many more investments have done even worse than that.

In fact, if you were an investor paying close attention to your 401k mutual fund choices, it seems likely that you probably had money in an energy fund or energy services fund around July 1. Why? Because if you were paying attention, those were some of the few funds that were up nicely for the first half of the year. Most funds were down, but energy and commodity funds were doing just fine.

So, by paying attention, it might seem logical to move even more money into those funds that were doing so well. After all, diversification was not doing you any good! Everything but commodity funds were doing poorly. So, why not move more money into those funds doing well. You probably did just that. And you probably got killed over the latter half of the year.
Energy and commodity funds are down way more than 50% over the latter half of 2008. After all, a barrell of oil has fallen from around $150/bbl all the way down to $45/bbl, over a $100 decrease. Percentage-wise, a barrell of oil is only worth about 1/3 of what it was worth 6 months ago, roughly a 66% LOSS! Ouch.