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^Yeah I hear all that I'm just frustrated since I feel like I've hit a "wall" with my 401k lately. Past 3 months or so, growth has gone stagnant for some reason, then this all happens. I have my allocation pretty much all set to just a target maturity date.
^Yeah I hear all that I'm just frustrated since I feel like I've hit a "wall" with my 401k lately. Past 3 months or so, growth has gone stagnant for some reason, then this all happens. I have my allocation pretty much all set to just a target maturity date.
Totally understandable. I too am frustrated, of course, because we all want things to go up and up! But I have to keep my long-term goal in sight and not let this spook me.
In fact this is happy since I will probably contribute the rest in my Roth IRA and then put in more in my Roth 403b.
As long as you are following your retirement plan, it's all fine.
And guess what being 28 I just started my career last year after a long-time in school. Well I started contributing in 07/2013....yeah one of the most expensive times to get in. And it did not phase me one bit. Even though my timing may be bad just due to pure luck, I'll stay the course and in 38 years when I retire I will know that I'll have a great retirement portfolio.
Well my YTD return is -2.07%, 3 month return is -4.68%
The real kicker is that I've been working extra hours these past few months, contributing a decent amount this whole time... just to have it go out like that. I'm too nervous to disable any contributions since I'm sure it'll bounce back immediately after, mirite?
Unless you've sold then you haven't realized any losses just like when the market is up you haven't realized any gains until you pull out of the position. The market will always fluctuate, so take advantage of a bear market to stock up on quality stocks for the next bull run.
Well despite all the crap that's been going on lately, I haven't really lost much of my 401k. I'm at -3.4% for last year, but what with employer contributions, it's still steadily climbing
Well despite all the crap that's been going on lately, I haven't really lost much of my 401k. I'm at -3.4% for last year, but what with employer contributions, it's still steadily climbing
Still -3.4% for 3 month
-1.5% YTD
btw is it smart to set your target maturity beyond your expected retirement time when you're in the early stages? Then of course bring it back to where it needs to be as you get older/the balance really grows? Anyone done that?
We've had a pretty good year in the stock market. Time to re-evaluate.
I have a Traditional IRA, Roth IRA, one inactive 401k and one active 401k. Combined, I have about 1.5x my current salary, but my salary has been significantly bumped two years in a row, so I might be at 2x in last year's figures. I wonder how I should compute that.
Simplified my accounts. Down to one active 401k, an active Roth IRA and a stagnant Traditional IRA. Currently valued at 1.8x my salary, even after this year's raise. I hope the growth is exponential and not linear.
btw is it smart to set your target maturity beyond your expected retirement time when you're in the early stages? Then of course bring it back to where it needs to be as you get older/the balance really grows? Anyone done that?
If you are going to do that you might as well buy yourself a couple of index funds that have lower maint fee then your targeted thing.
You are under performing the S&P500. The VFIAX is up 2.73% Year to Date. It was up over 13% last year.
btw is it smart to set your target maturity beyond your expected retirement time when you're in the early stages? Then of course bring it back to where it needs to be as you get older/the balance really grows? Anyone done that?
up 2.2% here while doing auto rebalancing with the Prudential....
I'm in VTSAX for both my Roth IRA and my work's Roth 403b.
Basically I'm doing it super simple...it's a total US market index...captures all those small cap, small value, large cap, large value, emerging, health care, etc. etc.
I'll need to start dialing into bonds within the upcoming 10 years or so. But now I'm fairly aggressive and staying with my 100% stock allocation.
Waiting for the next big crash to come so I can buy up more shares on the cheap.
Waiting for the next big crash to come so I can buy up more shares on the cheap.
You might get a chance tomorrow/this week. Greeks voted to a bail out deal. All futures down a bit over 1% across the board. Tomorrow's going to be a nasty day.
The target fund I use in my 401k at work was priced at 20.882 on 11/9/15 and yesterday was 9.540, so my value has been halved from this recent rout.
However, I took out a 401k loan back at the peak and I'm sitting pretty good paying it back, buying the shares back at their new lower prices. Usually you get screwed with 401k loans because the price keeps going up as you're repaying the loan and you end up with less shares than when you started. I think I caught a lucky break here.
Is that one of those 401k plans where they send you a paper statement every month showing big returns but in reality the manager bought a yacht, Italian cars, whores and drugs?
Uh... find that hard to believe. Better check those numbers again...
fwiw I don't have nearly as much in my 401k as I should. Like 1/5 what I should at my age... at least IMO.
Originally Posted by doopstr
Is that one of those 401k plans where they send you a paper statement every month showing big returns but in reality the manager bought a yacht, Italian cars, whores and drugs?
No they send me statements telling me I get 3% returns when everyone else is sitting well.
Then they probably get whores, coke and yachts.
Didn't see I got a supplemental deposit from my employer. I'd say somewhere around 12-15% then.. :embarrassed:
Didn't see I got a supplemental deposit from my employer. I'd say somewhere around 12-15% then.. :embarrassed:
Sorry to continue to burst your bubble, but your gains are not even close to 12-15%. More like ~3%. In the last 2 weeks (3/7/16 - 3/21/16), the DOW is up 3.2%, the S&P is up 2.5% and the NASDAQ is up 2.1%.
My Roth account:Time Period:12/02/2005 to 10/10/2016 Total Return (since inception): 7.91%
I rolled over my other accounts, so I don't have as long of a history, but my gut feeling says that 7-8% is about right.
Before I rolled my 401K over from my old company, I had left it just sitting there for 10 years. When I had rolled it over it had more than doubled in size.
~8% long term average is pretty good and in line with both the S&P and Dow long term averages (dividends reinvested, inflation adjusted). Nothing wrong with that kind of return IMO.
7-8% is VERY good. I would kill for that kind of long-term return. (if it can avg out to 30-40 years). Many people get returns way less...and even less than the market indexes as well....likely due to drag from fees that many may not be aware of...as John Oliver pointed out above. Some experts in the field predict a general down trend in equity returns in the next decades compared to what we've had in the past..we'll see if that pans out (hopefully not!)
Simplified my accounts. Down to one active 401k, an active Roth IRA and a stagnant Traditional IRA. Currently valued at 1.8x my salary, even after this year's raise. I hope the growth is exponential and not linear.
At age 35, you should have saved an amount equal to your annual salary.
At age 45, you should have saved three times your annual salary.
At 55, you should have five times your salary.
When you retire at age 67, you should have eight times your annual pay.
My RRSP and TFSA (equivalents of 401K and Roth) are doing fine, so I am on track to retire in my early 50s if I wanted it. However I don't trust the markets that much.
To have performance, you have to take risk, nothing new. What is new is that it is now the only way to do it. Before, the common wisdom was to get 70% market shares and 30% of bonds. Bonds are almost dead and now my portfolio is 90% market shares. I aim at 6% long term. But in the next 3-7 years we are due for another major crisis and I wouldn't surprised of many years in a row with negative performances, like 2000-2001-2002. 1 or 2 is "normal';3+ is much harder to overcome.
“In this section, you will encounter, early on, the story of an investment bet I made nine years ago and, next, some strong opinions I have about investing. As a starter, though, I want to briefly describe Long Bets, a unique establishment that played a role in the bet. Long Bets was seeded by Amazon’s Jeff Bezos and operates as a non-profit organization that administers just what you’d guess: long-term bets. To participate, “proposers” post a proposition at Longbets.org that will be proved right or wrong at a distant date. They then wait for a contrary-minded party to take the other side of the bet. When a “doubter” steps forward, each side names a charity that will be the beneficiary if its side wins; parks its wager with Long Bets; and posts a short essay defending its position on the Long Bets website. When the bet is concluded, Long Bets pays off the winning charity.
…
Now, to my bet and its history. In Berkshire’s 2005 annual report, I argued that active investment management by professionals – in aggregate – would over a period of years underperform the returns achieved by rank amateurs who simply sat still. I explained that the massive fees levied by a variety of “helpers” would leave their clients – again in aggregate – worse off than if the amateurs simply invested in an unmanaged low-cost index fund.
…
What followed was the sound of silence. Though there are thousands of professional investment managers who have amassed staggering fortunes by touting their stock-selecting prowess, only one man – Ted Seides – stepped up to my challenge. Ted was a co-manager of Protégé Partners, an asset manager that had raised money from limited partners to form a fund-of-funds – in other words, a fund that invests in multiple hedge funds.
…
For Protégé Partners’ side of our ten-year bet, Ted picked five funds-of-funds whose results were to be averaged and compared against my Vanguard S&P index fund. The five he selected had invested their money in more than 100 hedge funds, which meant that the overall performance of the funds-of-funds would not be distorted by the good or poor results of a single manager.
…
The compounded annual increase to date for the index fund is 7.1%, which is a return that could easily prove typical for the stock market over time. That’s an important fact: A particularly weak nine years for the market over the lifetime of this bet would have probably helped the relative performance of the hedge funds, because many hold large “short” positions. Conversely, nine years of exceptionally high returns from stocks would have provided a tailwind for index funds. Instead we operated in what I would call a “neutral” environment. In it, the five funds-of-funds delivered, through 2016, an average of only 2.2%, compounded annually.
That means $1 million invested in those funds would have gained $220,000. The index fund would meanwhile have gained $854,000.”
About a year ago I changed over to 50/50 VTIAX AND VFIAX. 8% last year and so far so good this year. I also buy into putting as much in as you can afford. Fortunately every year I get a raise usually from 2-4% depending on the year. I have taken half of that percentage every year and upped my investment.
However, they're talking about additional gains from a 401k vs other investment alternatives. Even if you're in a tax-efficient and fee-efficient alternative there are two things a 401k offers that are hard to beat:
1.) Company match. That's a pure return (often 100%) on some percentage of savings without doing anything else;
2.) Ease of use/ease of entry .... so simple to sign up and add or change your contributions, payroll deductions, etc.;
3.) A kind of voluntarily enrollment to enforced savings discipline. Because of the above it helps insure a savings rate once you get started. For many people if that money hits the bank account first, it's not going to be saved.
That said, as soon as I hit 59 1/2, I'm planning on moving as much 401k money to an IRA for some of the reasons they've listed. Specifically, broader selection of investment options and fees that are 3x - 4x lower.
That's a timely article; I've been toying with the idea of dropping my 401k contribution to the minimum to maintain the full company match and then putting the rest into an IRA.
That's a timely article; I've been toying with the idea of dropping my 401k contribution to the minimum to maintain the full company match and then putting the rest into an IRA.
It's a good idea but just be careful with the tax implications of doing so. I'm maxing out my 401k just because it lowers my taxable income.
Also, my marginal tax rate is a hell of a lot higher than 12%...
It's a good idea but just be careful with the tax implications of doing so. I'm maxing out my 401k just because it lowers my taxable income.
Also, my marginal tax rate is a hell of a lot higher than 12%...
^THIS!
The other issues when comparing a Regular IRA with a 401K are the contribution limits; my income is high enough where any money I contribute to an IRA would be taxable, however, given my age, I can contribute $26,000 in 2020 in pre-tax income. That plus the fact my company has an unusually high match means total contributions to my 401K this year will be about $40,000; waaaaay better than an IRA.
That's a good point. My company has a pretty good match - 7.5% if I put in a minimum of 6%. I put in more than that - it works out to be just about the maximum for 2020 ($19,500). From what I've been reading (again, not super in depth), IRA contribution limits are $6k for 2020, so maybe it doesn't make the most sense to take from one to give to the other.
However, there may be an opportunity to set up an IRA to compliment the 401k - just brainstorming though, I don't really have the motivation to work today so this is where my mind goes
I'm just frustrated since I feel like I've hit a "wall" with my 401k lately. Past 3 months or so, growth has gone stagnant for some reason, then this all happens. I have my allocation pretty much all set to just a target maturity date.
to a bail out deal. All futures down a bit over 1% across the board. Tomorrow's going to be a nasty day.
at least IMO.
Didn't see I got a supplemental deposit from my employer. I'd say somewhere around 12-15% then.. :embarrassed:
