I Just Woke Up From A Fuzzy Dream

I’ve bashed company managed 401Ks in the past. Now it feels like I’m kicking a corpse. Let me get one final punch in.

Today I received the year end statement for my company 401K. When I say “my company”, I mean the one I worked for from January 2002 – May 2006 and again from September 2007 – April 2008. Both times I left the company, I had the balance of my 401K moved to a self directed account with Ameritrade.

Smart move.

I know people who can’t be bothered with managing their retirement money. They set the contributions and then hope everything works out. I didn’t believe the market was honest and exited before the crash.

Here were the 2008 returns for the 4 diversified funds offered by my company.

  • -16.79% Conservative
  • -26.14% Moderate
  • -34.54% Growth
  • -40.61% Aggressive

When I look back at the 3 year returns, all these funds are still negative. In fact, none of these funds beat the FIXED INCOME FUND over a 1, 3, 5 or even 10 year time span. But fixed income is so boring, who would ever advise something that boring?

1 Comment

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  1. You must admit -40.61% IS very aggressive! 🙂

    My wife had one of these plans at her last company. They wouldn’t allow straight cash, so we put her money in a 100% treasury fund. The primary goal was avoiding income taxes on the money …then transfer it to a self directed fund later.

    Her other options were 7 stock funds and 2 bond funds (both of which had exposure to mortgage backed securities). What a joke!

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