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My main market exposure is my 401k. I’m thinking that it’s time to move some funds to less risky options.  Not anywhere close to 100% but perhaps 20-30. Obviously it would have been better to do this a couple month ago, but can’t change that now.

i also decided to lower my 401k contribution to just max out the matching. I would rather use that excess money to meet some other short term financial goals.

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2 hours ago, Nice Guy Eddie said:

i also decided to lower my 401k contribution to just max out the matching. I would rather use that excess money to meet some other short term financial goals.

Is it worth it to give up the tax free growth? Depending on your age you might not be touching the money in a 401k for many years anyway and anything you don't contribute to the max this year can't grow in the good years. 

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10 minutes ago, hornbri said:

Is it worth it to give up the tax free growth? Depending on your age you might not be touching the money in a 401k for many years anyway and anything you don't contribute to the max this year can't grow in the good years. 

a few points:

  • I didn't say that I was taking my 401k contributions to 0. If (when) we see a 20-30% drop, I will up the contributions again.
  • I've heard experts proclaim that contributing into a declining market is great because of dollar cost averaging.  I now prefer to lower my risk by contributing less until the market stabilizes.
  • I reserve the right to change my mind tomorrow.  and I can quickly catch up either later this year or next. 
  • I'm within 15 years of retirement so my perspective is different from someone that is younger. My age also means that new contributions are not very impactful to my overall balance.

 

Employees that started in the post-pension/full 401k world are now reaching retirement. Many of them are not seeing the returns that were  "promised" when they heard their initial 401k pitches at age 23. No one was lied to but 401ks are not the panacea that some pretend they are.

 

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5 minutes ago, Nice Guy Eddie said:

 

Employees that started in the post-pension/full 401k world are now reaching retirement. Many of them are not seeing the returns that were  "promised" when they heard their initial 401k pitches at age 23. No one was lied to but 401ks are not the panacea that some pretend they are.

 

All of those Morans tricked into believing they could retire with a 401k.  I'd need like a 5M atleast.

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30 minutes ago, 52-80 said:

All of those Morans tricked into believing they could retire with a 401k.  I'd need like a 5M atleast.

The biggest problem we're encountering in the business is that for many years, those that are retiring now were told they would be spending less money in retirement than they were during their working years.  

THAT, is absolute farce, and caused many boomers to save a bit less during their formative earning years.  

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35 minutes ago, Trey3216 said:

THAT, is absolute farce, and caused many boomers to save a bit less during their formative earning years.  

And it's now causing them to not retire which is fucking up the earnings potential of the middle class and kids coming out of college/young professionals. 

Hell of a time to be alive. 

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1 hour ago, Trey3216 said:

The biggest problem we're encountering in the business is that for many years, those that are retiring now were told they would be spending less money in retirement than they were during their working years.  

THAT, is absolute farce, and caused many boomers to save a bit less during their formative earning years.  

Their spending hasn’t gone down because they’re still carrying a lot of debt which is forcing them to keep working.

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Just now, Rusty Shackelford said:

Yep, and tax deferred is not the same as tax free.

Clearly you get taxed when you do withdraws, but the growth does not get taxed until then. 

When talking about shifting investment types that is and important distinction, if you can keep it all in a 401k you can take advantage of that growth now and then only pay taxes later when you actually use the money. 

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2 hours ago, mulletpelini said:

Well looks like I just got extra cash from hail damage at the exact wrong time.  Any great options for 6.5k besides Chitowns two friends?  I know, I'm really shoving my good fortune in your faces.....sorry not sorry.

GE stock is at discount!

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On 8/15/2019 at 9:12 AM, Nice Guy Eddie said:

Employees that started in the post-pension/full 401k world are now reaching retirement. Many of them are not seeing the returns that were  "promised" when they heard their initial 401k pitches at age 23. No one was lied to but 401ks are not the panacea that some pretend they are.

 

OK.  Cool.  Hook'em.

 

s-and-p-500-history-chart.gif

Edited by SaucyJack
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5 hours ago, SaucyJack said:

OK.  Cool.  Hook'em.

 

s-and-p-500-history-chart.gif

Where’s your graph about the actual returns people have achieved with 401ks?   The graph shows an approx 5% return annually for the past 20 years. I recall 7-8% were touted as the historic returns.  Drop 2% from estimates AND add the fees, and the ultimate results fall short of expectations.

i also believe that too many employers shortchange their employees with weak 401k matches, poor investment choices, and failure to shoulder more (some?) of the costs. And why do practically zero employers allow current employees to take transfer your 401k funds to an IRA? This is allowed by the govt. That might actually require fidelity to work for the employees’ business. Instead it’s easier to wine and dine benefits mgrs at conferences to keep that sweet money flowing.

add in the fact that Corp America/general economy flat-lined salaries over the past decade, and macro 401k balances haven't grown as anticipated for workers overall.

And if you read my comment, I wasn’t telling people to not contribute to 401ks. It’s Stupid not to contribute. I was saying to keep your eyes open and have other options too. People shouldn’t be sheep and expect a great retirement by solely relying on their 401k. 

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On 8/16/2019 at 1:27 AM, mulletpelini said:

Well looks like I just got extra cash from hail damage at the exact wrong time.  Any great options for 6.5k besides Chitowns two friends?  I know, I'm really shoving my good fortune in your faces.....sorry not sorry.

That’s a fair amount of cocaine/hookers.  

If you want a serious answer, ignore the noise above, and throw it in an index fund.  But that’s boring.  

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13 hours ago, Nice Guy Eddie said:

Where’s your graph about the actual returns people have achieved with 401ks?   The graph shows an approx 5% return annually for the past 20 years. I recall 7-8% were touted as the historic returns.  Drop 2% from estimates AND add the fees, and the ultimate results fall short of expectations.

i also believe that too many employers shortchange their employees with weak 401k matches, poor investment choices, and failure to shoulder more (some?) of the costs. And why do practically zero employers allow current employees to take transfer your 401k funds to an IRA? This is allowed by the govt. That might actually require fidelity to work for the employees’ business. Instead it’s easier to wine and dine benefits mgrs at conferences to keep that sweet money flowing.

add in the fact that Corp America/general economy flat-lined salaries over the past decade, and macro 401k balances haven't grown as anticipated for workers overall.

And if you read my comment, I wasn’t telling people to not contribute to 401ks. It’s Stupid not to contribute. I was saying to keep your eyes open and have other options too. People shouldn’t be sheep and expect a great retirement by solely relying on their 401k. 

Just buy an index on your own.  No fees and likely 6%+ long term.  Promising people 8% is definitely doing them a disservice.  

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14 hours ago, Nice Guy Eddie said:

Where’s your graph about the actual returns people have achieved with 401ks?   The graph shows an approx 5% return annually for the past 20 years. I recall 7-8% were touted as the historic returns.  Drop 2% from estimates AND add the fees, and the ultimate results fall short of expectations.

i also believe that too many employers shortchange their employees with weak 401k matches, poor investment choices, and failure to shoulder more (some?) of the costs. And why do practically zero employers allow current employees to take transfer your 401k funds to an IRA? This is allowed by the govt. That might actually require fidelity to work for the employees’ business. Instead it’s easier to wine and dine benefits mgrs at conferences to keep that sweet money flowing.

add in the fact that Corp America/general economy flat-lined salaries over the past decade, and macro 401k balances haven't grown as anticipated for workers overall.

And if you read my comment, I wasn’t telling people to not contribute to 401ks. It’s Stupid not to contribute. I was saying to keep your eyes open and have other options too. People shouldn’t be sheep and expect a great retirement by solely relying on their 401k. 

Why are you bitching at Fidelity?  They aren't the ones that choose to restrict investments.  They basically administer accounts according to the employer's and then the employees' choices.  By most 401k's I've seen and been in, I'd rather have Fidelity run it than anyone else.

Also, I'm not sure defined benefit pensions were all that.  Even in the 60s, I'm not sure they provided a complete, plush retirement.  And most of them didn't/wouldn't survive the 70s, ERISA/401k notwithstanding.

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1 hour ago, ChiTownDoc said:

Just buy an index on your own.  No fees and likely 6%+ long term.  Promising people 8% is definitely doing them a disservice.  

I've never been anywhere that returns were promised. But then over only had 401k's since 1981.

When I started you had maybe 5 or 6 funds to choose from, and you could change your allocation maybe at the start of each quarter. But then they all had loads and fees.

Agree with the Fidelity comments, they offer good service for the plans, and n work well with plan sponsors on investment selections.

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20 minutes ago, Wally Fairway said:

I've never been anywhere that returns were promised. But then over only had 401k's since 1981.

When I started you had maybe 5 or 6 funds to choose from, and you could change your allocation maybe at the start of each quarter. But then they all had loads and fees.

Agree with the Fidelity comments, they offer good service for the plans, and n work well with plan sponsors on investment selections.

Yeah, no one promised anything.  I think the assumption underlying the 401k was something like a 7% return, which was average or slightly below then and it's been below that since.

Those that have planned (or been capable of planning) for retirement, have always saved in addition to social security and whatever employment provided, whether pension or 401k.

Also, I think the notion of carrying debt beyond a couple of years of mortgage into retirement is definitely a relatively new concept that strains institutional retirement plans.

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As for why I picked on fidelity, I have no problems with them from managing 2 401k for me.  I used them as a stand-in in my comment. However I distinctly recall advisors discussing 8-10% historic returns. No memory of where they were from. Sure they always followed it up with disclaimers but why throw out that # unless you are trying set the hook.

however one area that I will criticize fidelity and others in their field are the ridiculous “conferences” they put on for corporate benefits managers/directors/vps. A friend of mine has traveled the world for her company to attend fidelity conferences and she admits there is little education being given to the customers.  It’s to thank the benefit managers for bringing millions into fidelity and remind them what will they will personally lose if the company 401ks go elsewhere.  My “favorite” trip of hers was to the Masters a few years back. 

Wouldn’t it be better for the employee and their 401k plan to have lower fees than for others to get free vacations?

but sorry about the fidelity comment before.  Really seemed to strike a nerve.

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On 8/17/2019 at 4:34 AM, Nice Guy Eddie said:

Where’s your graph about the actual returns people have achieved with 401ks?   The graph shows an approx 5% return annually for the past 20 years. I recall 7-8% were touted as the historic returns.  Drop 2% from estimates AND add the fees, and the ultimate results fall short of expectations.

i also believe that too many employers shortchange their employees with weak 401k matches, poor investment choices, and failure to shoulder more (some?) of the costs. And why do practically zero employers allow current employees to take transfer your 401k funds to an IRA? This is allowed by the govt. That might actually require fidelity to work for the employees’ business. Instead it’s easier to wine and dine benefits mgrs at conferences to keep that sweet money flowing.

add in the fact that Corp America/general economy flat-lined salaries over the past decade, and macro 401k balances haven't grown as anticipated for workers overall.

And if you read my comment, I wasn’t telling people to not contribute to 401ks. It’s Stupid not to contribute. I was saying to keep your eyes open and have other options too. People shouldn’t be sheep and expect a great retirement by solely relying on their 401k. 

 

7 hours ago, Nice Guy Eddie said:

As for why I picked on fidelity, I have no problems with them from managing 2 401k for me.  I used them as a stand-in in my comment. However I distinctly recall advisors discussing 8-10% historic returns. No memory of where they were from. Sure they always followed it up with disclaimers but why throw out that # unless you are trying set the hook.

however one area that I will criticize fidelity and others in their field are the ridiculous “conferences” they put on for corporate benefits managers/directors/vps. A friend of mine has traveled the world for her company to attend fidelity conferences and she admits there is little education being given to the customers.  It’s to thank the benefit managers for bringing millions into fidelity and remind them what will they will personally lose if the company 401ks go elsewhere.  My “favorite” trip of hers was to the Masters a few years back. 

Wouldn’t it be better for the employee and their 401k plan to have lower fees than for others to get free vacations?

but sorry about the fidelity comment before.  Really seemed to strike a nerve.

Since inceptions the average annual total return for the following Fidelity funds is above 10%. 

https://www.fidelity.com/fund-screener/compare.shtml#!&fIds=FCNTX%2CFPURX%2CFLPSX%2CFXAIX%2CFMAGX

Having owned all at one time or another over past 30 years, I am happy with the growth.

For many, Fidelity is the only game in town and, sure, fees could have been lower.  I prefer Vanguard funds and have exposure there as well.

Everyone has their own unique situation and blanket statements for all never hold water.  GLTA.

 

 

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8 hours ago, Nice Guy Eddie said:

As for why I picked on fidelity, I have no problems with them from managing 2 401k for me.  I used them as a stand-in in my comment. However I distinctly recall advisors discussing 8-10% historic returns. No memory of where they were from. Sure they always followed it up with disclaimers but why throw out that # unless you are trying set the hook.

however one area that I will criticize fidelity and others in their field are the ridiculous “conferences” they put on for corporate benefits managers/directors/vps. A friend of mine has traveled the world for her company to attend fidelity conferences and she admits there is little education being given to the customers.  It’s to thank the benefit managers for bringing millions into fidelity and remind them what will they will personally lose if the company 401ks go elsewhere.  My “favorite” trip of hers was to the Masters a few years back. 

Wouldn’t it be better for the employee and their 401k plan to have lower fees than for others to get free vacations?

but sorry about the fidelity comment before.  Really seemed to strike a nerve.

It was a legit question.  No that's fine and that's a legit beef.  But they are waaaay down the scale of Wall Street marauders. More sales organizations are like that than different; just about any organization with customers or clients puts them knee deep in hookers and gin as often as possible.  I wish it were different, too, but you have to change the customers first.

Also, I think it's important to understand that 401ks were based on underlying rates of return that were achievable, whereas a lot of defined benefit plans weren't, despite professional management.  Which is why most pensions are completely off the rails today.

Edited by TwiceHorn
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21 hours ago, Rip76 said:

I totally agree.

I’ve had my 401k administered by Vanguard and Fidelity at various points in time.  Both are fine, but I would give a slight edge to Vanguard.  I’m a low maintenance regular contribution and forget it kind of guy so it may be different for you BSD’s that need complex trading strategies that wind up doing fuck all.

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Talking about returns. I started investing in 2012 where I have put at least $1,000 every month in some type of index etf (outside of 401k). All etfs are the commission free ones with Fidelity  

I just got done updating the numbers and my IRR annualized is 6.05%. 

Not amazing, not terrible, but it took little or no effort on my part. 

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2 hours ago, Telegraph_it said:

Talking about returns. I started investing in 2012 where I have put at least $1,000 every month in some type of index etf (outside of 401k). All etfs are the commission free ones with Fidelity  

I just got done updating the numbers and my IRR annualized is 6.05%. 

Not amazing, not terrible, but it took little or no effort on my part. 

That seems low. Since January 2012 the annual return on a 500 index has been 14.3 nominal, 12.38 real.  Granted that's through July so the August bloodletting brings it down some, but unless you've been in some really underperforming indexes, I think the monthly contribution is throwing your math off.

As far as fidelity, my 401k through them charges me a whopping 1 basis point (.01%) for the 500 index.  If I want to get crazy and do the completion index it goes to 4 bps.  They can hire every hooker and stripper in Georgia for their Masters party as long as they keep charging me that.

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23 hours ago, Nice Guy Eddie said:

As for why I picked on fidelity, I have no problems with them from managing 2 401k for me.  I used them as a stand-in in my comment. However I distinctly recall advisors discussing 8-10% historic returns. No memory of where they were from. Sure they always followed it up with disclaimers but why throw out that # unless you are trying set the hook.

however one area that I will criticize fidelity and others in their field are the ridiculous “conferences” they put on for corporate benefits managers/directors/vps. A friend of mine has traveled the world for her company to attend fidelity conferences and she admits there is little education being given to the customers.  It’s to thank the benefit managers for bringing millions into fidelity and remind them what will they will personally lose if the company 401ks go elsewhere.  My “favorite” trip of hers was to the Masters a few years back. 

Wouldn’t it be better for the employee and their 401k plan to have lower fees than for others to get free vacations?

but sorry about the fidelity comment before.  Really seemed to strike a nerve.

Many people largely chase higher returns, with little regard to risks.
I was working at a company in 1999 that had been acquired by VC, and one of the changes was freezing a money purchase pension plan and putting in a 401k in it's place. We picked Fidelity as the provider and they did a pretty good job on the roll out; and we brought in 3rd party advisors to help with fund selections. The advisors were pretty frustrated as many of the participants wanted to use 15-20% as their expected returns. This was due to the dot.com boom and the craziness in the market (I believe the term irrational exuberance applies here). But there were people putting it all into NASDAQ growth funds (or whatever the closest thing they could get to that).

Nobody was promised anything - but funds are presented with historic return information and many people think that "historic performance is no guarantee of future returns" is just boilerplate legalese.

Hell I'm fighting with my 88 year of Dad, because he wants to be an aggressive investor and though he would struggle to spend his life savings, he seems hell bent on chasing high dividend stocks and moving his interest bearing money around to different banks for an extra 0.10-0.25% interest on 6-18 month CD's. He basically has all the time in the world on his hands and he likes to use the Fidelity screening tools. I'm thinking about "fixing" his computer access and blocking certain websites ;)

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1 hour ago, Wally Fairway said:

 

Hell I'm fighting with my 88 year of Dad, because he wants to be an aggressive investor and though he would struggle to spend his life savings, he seems hell bent on chasing high dividend stocks and moving his interest bearing money around to different banks for an extra 0.10-0.25% interest on 6-18 month CD's. He basically has all the time in the world on his hands and he likes to use the Fidelity screening tools. I'm thinking about "fixing" his computer access and blocking certain websites ;)

There are worse things than chasing yield on FDIC insured CDs.  If he's got the time and the patience for that game let him have his fun.  Now chasing yield on stocks is a whole different ball game, obviously.

 

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