401k advice

[Coronita]

Guaranteed Short-Term Securities Fund
Core Bond/BSAM Fund
Fidelity Advisor Balanced Account (FAIGX)
Lifetime Funds
Dryden S&P 500(R) Index Fund
Large Cap Blend / Victory fund (oooohh "victory")
Large Cap Value/AJO Fund
Oakmark Select Fund (OARLX)
Oppenheimer Capital Appreciation Fund (OPTFX)
Mid CAp Growth / Artisan Partners Fund
Mid Cap Value / Integrity Fund
AIM Small Cap Growth Fund (GTSAX)
Small Cap Value / MEA Fund
Columbia International Value Fund (NIVLX)
Oppenheimer Global Fund (OPPAX)

 

I'm sorry to say, your employer's 401k plan looks pretty sh!tty.

1 index fund. I often wonder why more employers don't just go with Vanguard.

 

 

[pencilneck]

Unless you are fully (or nearly fully) vested the employer match isn’t much incentive to participate in a 401k. I have no data to support this, but in the first few years of employment the odds are probably high that you will be working elsewhere before being fully vested.

At your second or third complete year with the company you will have a much stronger feeling for whether or not you will be with this company the 4-5 years it would take to make participating in the 401k worth while.

My advice is to save/invest in other ways right now.

[pencilneck]

Unless you are fully (or nearly fully) vested the employer match isn’t much incentive to participate in a 401k. I have no data to support this, but in the first few years of employment the odds are probably high that you will be working elsewhere before being fully vested.

At your second or third complete year with the company you will have a much stronger feeling for whether or not you will be with this company the 4-5 years it would take to make participating in the 401k worth while.

My advice is to save/invest in other ways right now.

[pencilneck]

Unless you are fully (or nearly fully) vested the employer match isn’t much incentive to participate in a 401k. I have no data to support this, but in the first few years of employment the odds are probably high that you will be working elsewhere before being fully vested.

At your second or third complete year with the company you will have a much stronger feeling for whether or not you will be with this company the 4-5 years it would take to make participating in the 401k worth while.

My advice is to save/invest in other ways right now.

[pencilneck]

Unless you are fully (or nearly fully) vested the employer match isn’t much incentive to participate in a 401k. I have no data to support this, but in the first few years of employment the odds are probably high that you will be working elsewhere before being fully vested.

At your second or third complete year with the company you will have a much stronger feeling for whether or not you will be with this company the 4-5 years it would take to make participating in the 401k worth while.

My advice is to save/invest in other ways right now.

[pencilneck]

Unless you are fully (or nearly fully) vested the employer match isn’t much incentive to participate in a 401k. I have no data to support this, but in the first few years of employment the odds are probably high that you will be working elsewhere before being fully vested.

At your second or third complete year with the company you will have a much stronger feeling for whether or not you will be with this company the 4-5 years it would take to make participating in the 401k worth while.

My advice is to save/invest in other ways right now.

[michael]

Regarding vesting. Unless it is cliff vesting, a portion of the money will be vested each year. In the example of 5 year vesting, you vest at a rate of 20% each year. After 3 years, 60% of the employer match is yours. It’s still money you otherwise would not have.

Also most mutual funds will revert back towards their benchmark. Your mutual funds aren’t that bad. The type of mutual fund shares, and thus their expenses, will be based on the size of the total 401k plan.

To clarify, alpha is a measure of risk adjusted performance. It demonstrates the true value added by the portfolio manager. It takes beta into account in the formula (CAPM). Also, be sure to take notice of R2 (R squared) which is the correlation coefficient. If the R2 is too low, it invalidates alpha and the correct index is not being used.

I think, you ought to at least place 6% in the plan.

[michael]

Regarding vesting. Unless it is cliff vesting, a portion of the money will be vested each year. In the example of 5 year vesting, you vest at a rate of 20% each year. After 3 years, 60% of the employer match is yours. It’s still money you otherwise would not have.

Also most mutual funds will revert back towards their benchmark. Your mutual funds aren’t that bad. The type of mutual fund shares, and thus their expenses, will be based on the size of the total 401k plan.

To clarify, alpha is a measure of risk adjusted performance. It demonstrates the true value added by the portfolio manager. It takes beta into account in the formula (CAPM). Also, be sure to take notice of R2 (R squared) which is the correlation coefficient. If the R2 is too low, it invalidates alpha and the correct index is not being used.

I think, you ought to at least place 6% in the plan.

[michael]

Regarding vesting. Unless it is cliff vesting, a portion of the money will be vested each year. In the example of 5 year vesting, you vest at a rate of 20% each year. After 3 years, 60% of the employer match is yours. It’s still money you otherwise would not have.

Also most mutual funds will revert back towards their benchmark. Your mutual funds aren’t that bad. The type of mutual fund shares, and thus their expenses, will be based on the size of the total 401k plan.

To clarify, alpha is a measure of risk adjusted performance. It demonstrates the true value added by the portfolio manager. It takes beta into account in the formula (CAPM). Also, be sure to take notice of R2 (R squared) which is the correlation coefficient. If the R2 is too low, it invalidates alpha and the correct index is not being used.

I think, you ought to at least place 6% in the plan.

[michael]

Regarding vesting. Unless it is cliff vesting, a portion of the money will be vested each year. In the example of 5 year vesting, you vest at a rate of 20% each year. After 3 years, 60% of the employer match is yours. It’s still money you otherwise would not have.

Also most mutual funds will revert back towards their benchmark. Your mutual funds aren’t that bad. The type of mutual fund shares, and thus their expenses, will be based on the size of the total 401k plan.

To clarify, alpha is a measure of risk adjusted performance. It demonstrates the true value added by the portfolio manager. It takes beta into account in the formula (CAPM). Also, be sure to take notice of R2 (R squared) which is the correlation coefficient. If the R2 is too low, it invalidates alpha and the correct index is not being used.

I think, you ought to at least place 6% in the plan.

[michael]

Regarding vesting. Unless it is cliff vesting, a portion of the money will be vested each year. In the example of 5 year vesting, you vest at a rate of 20% each year. After 3 years, 60% of the employer match is yours. It’s still money you otherwise would not have.

Also most mutual funds will revert back towards their benchmark. Your mutual funds aren’t that bad. The type of mutual fund shares, and thus their expenses, will be based on the size of the total 401k plan.

To clarify, alpha is a measure of risk adjusted performance. It demonstrates the true value added by the portfolio manager. It takes beta into account in the formula (CAPM). Also, be sure to take notice of R2 (R squared) which is the correlation coefficient. If the R2 is too low, it invalidates alpha and the correct index is not being used.

I think, you ought to at least place 6% in the plan.

[DaCounselor]

My advice is to max out your 401K contributions every year, especially at your age. The contributions are not taxed, thereby providing an instant return and more capital to earn investment income from. The contributions will also grow tax-free until they are withdrawn. The contributions are periodic by nature and therefore provide the benefit of dollar cost averaging.

I would caution you to think carefully about how much weight to place on outright guesses as to what the government may or may not due regarding future tax rates. Forecasting what the government will have in place in this regard 30 or 40 years from now may be a fool’s errand.

My own 401K is heavily weighted toward an S&P 500 index fund (40%), which you have as an option in your fund selections. I would encourage exposure to small cap stocks as well.

I’m a big advocate of 401K’s. I started investing early but didn’t max out, and really wish I had. I may be wrong but I would doubt that you will look back in 10, 20, 30 years and say “damn, I wish I contributed less money to my 401K”. But, to each his own.

[DaCounselor]

My advice is to max out your 401K contributions every year, especially at your age. The contributions are not taxed, thereby providing an instant return and more capital to earn investment income from. The contributions will also grow tax-free until they are withdrawn. The contributions are periodic by nature and therefore provide the benefit of dollar cost averaging.

I would caution you to think carefully about how much weight to place on outright guesses as to what the government may or may not due regarding future tax rates. Forecasting what the government will have in place in this regard 30 or 40 years from now may be a fool’s errand.

My own 401K is heavily weighted toward an S&P 500 index fund (40%), which you have as an option in your fund selections. I would encourage exposure to small cap stocks as well.

I’m a big advocate of 401K’s. I started investing early but didn’t max out, and really wish I had. I may be wrong but I would doubt that you will look back in 10, 20, 30 years and say “damn, I wish I contributed less money to my 401K”. But, to each his own.

[DaCounselor]

My advice is to max out your 401K contributions every year, especially at your age. The contributions are not taxed, thereby providing an instant return and more capital to earn investment income from. The contributions will also grow tax-free until they are withdrawn. The contributions are periodic by nature and therefore provide the benefit of dollar cost averaging.

I would caution you to think carefully about how much weight to place on outright guesses as to what the government may or may not due regarding future tax rates. Forecasting what the government will have in place in this regard 30 or 40 years from now may be a fool’s errand.

My own 401K is heavily weighted toward an S&P 500 index fund (40%), which you have as an option in your fund selections. I would encourage exposure to small cap stocks as well.

I’m a big advocate of 401K’s. I started investing early but didn’t max out, and really wish I had. I may be wrong but I would doubt that you will look back in 10, 20, 30 years and say “damn, I wish I contributed less money to my 401K”. But, to each his own.

[DaCounselor]

My advice is to max out your 401K contributions every year, especially at your age. The contributions are not taxed, thereby providing an instant return and more capital to earn investment income from. The contributions will also grow tax-free until they are withdrawn. The contributions are periodic by nature and therefore provide the benefit of dollar cost averaging.

I would caution you to think carefully about how much weight to place on outright guesses as to what the government may or may not due regarding future tax rates. Forecasting what the government will have in place in this regard 30 or 40 years from now may be a fool’s errand.

My own 401K is heavily weighted toward an S&P 500 index fund (40%), which you have as an option in your fund selections. I would encourage exposure to small cap stocks as well.

I’m a big advocate of 401K’s. I started investing early but didn’t max out, and really wish I had. I may be wrong but I would doubt that you will look back in 10, 20, 30 years and say “damn, I wish I contributed less money to my 401K”. But, to each his own.

[Author]

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