Investment BS Thread - Stocks/Futures/Mutual Funds/Bonds/Commodities/Options/ETFs/401ks/Etc

YES. You can change your entire 401k investment at any time. BUT, do not do what I found out the hard way and move it in and out of something within 30 days. I did and got a "warning". I called and they said don't do any "round trip" trades within a 30 day period. So basically you can move your 401k around once a month at a minimum. Not that I would recommend it though. But I've done it.

 

Here is a screenshot of my options. It doesn’t matter, the choices aren’t good, but I agree it is strange. It’s Paychex Flex.

Edit: I see no option on the website to sell shares I have but there may be a way.

 

Those index funds are usually 30% foreign investments - difficult to track down where exactly your money goes. Might be a decent time to buy into foreign though, the int'l markets have all been in the dumpster during 2018. No telling if it will continue but still lots of news about slowing growth in China so take that for what it's worth

 

Yep. As far as safe - anything with mostly treasuries is good. Usually called money market accounts.
Second safest - bond funds. Decent payout but those bonds can lose their value especially if there is a run on the fund - meaning high trading in a fairly illiquid market.
Medium risk would be something like a total US stock fund that mirrors SP500 - in my case that is VIIIX. Tons of companies in the mix, but obviously those with high market caps will move around your portfolio more (like apple, Microsoft etc).
Higher risk (in my opinion, due to the intl market) is a target fund with a long time horizon.
Highest risk - something actively managed and rebalanced often. Higher management fees, smaller pool of companies, but chance for big returns. Best to do some research on the holdings and see if you like what the firm has picked out.

 

Total market funds that basically mirror big indices like SP500 have extremely low fees. Anything in the 1% or higher is considered high fees, you typically see with actively managed funds.

 

You can get S&P index funds with zero expense ratios. But in a 401k your options are always more limited and you’ll end up with higher fees

 

Depends on his 401k broker. Some places are advertising zero fee index funds. Mine charges 0.03% for VIIIX (SP500 fund). Which is still basically nothing.

 

I think it’s just the limited options. You can’t pick VOO or SPY, so you’re stuck with the one the offer.

 

Just remember active funds almost never beat the market long term and cost a lot more

See info below:

Bad times for active managers: Almost none have beaten the market over the past 15 years. Some 66 percent of large-cap active managers failed to top the S&P 500 in 2016. Performance actually got worse over longer time frames, with more than 90 percentmissing benchmarks over a 15-year period.

 

Except in 2018


https://www.google.com/amp/s/www.fo...s-active-or-passive-going-to-win-in-2018/amp/

 

90% failed to beat the market over 15 years! Incredible

 

That's counting nearly a decade of ZIRP. I'd bet that actively managed funds may fare better in volatile markets, when stock picks and fundamentals may start to matter again.

 

I'm willing to bet over the long term they wont beat the market. Never have and never will.

 

I didnt even know what my 401k was but after reading here i had to go look, i set it up when started job and just let it ride
Also didnt know there was fees, looks like im 0.06% fees

 

jobs report crushed it again. Unemployment ticked up.

 

You are likely correct, but that wasn't what I was emphasizing

For instance
each percent column: 1 year 3 year 5 year 10 year/LOF





As you can see, VIIIX (SP500 fund) beat JSMTX (actively managed fund) over the long term, but JSMTX beat VIIIX by over 5% during 2018 which was a volatile year.

The devil is always in the details and you can't always use blanket statements for every strategy. Sure, a rising tide lifts all boats, but choppy water means you better have some strong boats to weather the storm.

 

The rule of thumb I use for actively managed funds is this. Lower gains in up years, lower losses in down years. Same reason for both instances, jumping in and out cuts some of the gain/loss down. The reason passive outperforms long term is that the overall trend is up. Just my take, could be wrong, but for long term investments I am all passive.

 

A classic mistake - You forgot to factor in the expense difference. Makes a big difference over the long term. You are paying extra for actively managed funds that underperform the market.

 

Not a mistake... even with 1% fees you'd still be up 4+% in 2018. I think you're just ignoring my point and reading what you want to read.

 

Timing the market and being successful?...not possible over the long run