Why You're Making Dumb 401(k) Choices

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when a company offers 401k and limit it to 8-10 mutual funds available they are controlling where you invest. this is america's capitalism, right? it should be illegal. people should be able to invest in any mutual fund or stock as they wish. it is like there are kickbacks or something to the company mgmt and ensuring or guaranteeing that bad investment firms stay afloat. also, i never understood the bottom line difference between ira and 401k. one is run by a company and one by an individual. or, sep-ira for a self-employed. i do not understand why an employee cannot op-out of a 401k and do sep-ira so they can utilize the higher deducted/investment limit to 16500 for 2009/2010. stupid congress.

xavier of PA 11:02AM December 30, 2009

Before and since the the fall of 2007 when the market started to go south I learned to manage my own employee sponsored 401k account . In doing so I took the time to go to my employers plan web site and read the information . You will get a wealth of information there that even a broker may be aware of but will not share with their clients . Fund managers can play a positive roll in multiple fields but 401k accounts are plans that should be treated as " savings accounts " for retirement and managed by participants themselves . Unfortunately until now the majority of us haven't been a nation of savers . Now that many people have been caught off guard due to the collapse of the housing and financial markets it is harder for them to sock away what they will need to retire comfortably but some savings is better than none at all . If your employers plan is web-based it should tell you how much ( by law ) that you can contribute each year . If you can sock away the maximum . With the volatility in the market these days you don't have to expose a lot of your money to see growth by saving more of your money . Before the tech bubble burst building a nice retirement portflio was a no-brainer for many people but with emloyers no longer funding their employees plans and cutting their matches the responsibility has shifted to us as employees ; we are responsible for our own retirement . Take advantage of your employers match ; that's free money on the table . Many participants of their plans have been mislead by the pros to believe that management of their account should be handled as " crap shoots " . That is wrong . Many of my co-workers who were to retire this year saw their accounts plunge 40% or more It's one thing to accumalate market gains ; it's another to know how to protect them against market downturns . With trading restrictions and hefty fees in place within 401k plans it's better to save more of your money ( in the stable value fund ) and select fund exposure carefully .
Your 401k account with ( if fortunate ) a defined pension and social security are the three financial vehicles we will need to get us through retirement . If you are 15 years or more from retirement ; time is on your side as far as saving your money and market risk . If you can max out your savings you can easily reach a 6 figure savings cushion in less than ten years . I did it myself . As I paid off my cc debt I built my retirement with money that was freed up . Today I will retire within 2 weeks . Along with the savings that I built I am one of the few that will enjoy help from a pension and paid healthcare . I'm not a millionare but my living expenses are low enough that I will be able to continue to save and enjoy retirement comfortably . Thanks for reading . Hopefully my information will help someone else in these trying times .

Jan Toussaint of NE 12:37PM March 29, 2009

Couple, both age 73+; retired since age 62. We had a mixed portfolio, but mostly CDs. Long term CDs didn't grow as fast as we would like, but they and interest are still intact. Mutual funds 403B/401K reduced to below purchase price after owning for 20 years; I-Bond purchased when limit was $30,000 each person are doing GREAT! Would love to own land, but that takes upkeep and taxes -- in Texas property taxes pay for education -- usually expensive.

btxusa of TX 2:19PM March 27, 2009

The company I work for is like most in that the 401K funds available are limited and your ability to manage them are extreemly limited to once every 90 days. On top of that my employer picked the Broker that has the highest mutual fund management charges in the industry.
Like most my 401k is down by 55% which turns out to be below the cost level for the investment I made.
In my opinion none of those mutual fund managers are worth a nickle.

Dean of OR 12:28PM March 27, 2009

The problem is that banks and investment firms created something called derivatives. A speculative blurring of what is a real asset which has value and wishfull thinking. Without identifiable properties to which you can ascertain value you have toxic assets. I heard one estimate to be 1.4 quadrillion in total derivative funds. That is a lot of trillions. No wonder no one knows what to do. These As@h*le$ screw up the free markets with a fractional system no one can keep track of. Now they want to start over by reinflating the bubble.
My advice.... Buy land. Buy gold. Move out of the cities. Grow your own food.

Jeff of WI 6:14AM March 27, 2009

Sheesh, why didn't I think of any of this. Seriously you financial talking heads never cease to amaze. You sit here and spin your "buy and hold", your "diversify" and whatever else you sheep blaat out on a daily basis and think you're adding value.
I have news for you - no one knows. And you people are the most dangerous, the ones who think they do. Absolutely none of you can give accurate advice in this market, and pretending that you do is irresponsible at best and dangerous and liable at worst. What this market has shown us is that its a fixed game. Just look at the shenanigans GE pulled a couple of weeks back with their dividend.
Online savings accounts, long term CD's are the only way to go if you're over 45.

joe of CT 2:51PM March 25, 2009

while we're at it, let's fix it so you can use tax-deferred 401(k) and IRA money to buy the land you're recommending.

Muser of NM 1:32PM March 25, 2009

you want a good tip. Take most of your money you are putting into a 401k and buy land. You can physically enjoy it and its not just a piece of paper in you hand that becomes worthless and makes someone else rich.

Jerm of AK 11:14AM March 25, 2009