81–90 of 105 posts
On the eve of their IPO, Google held lectures advising the soon-to-be minted millionaires how to avoid the mutual fund management fees. They brought in experts who one after the other advised low fee index funds: http://www.tradersnarrative.com/the-best-investment-advice-y...
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Except for those companies where you must have a 401K in order to collect a company matching contribution, in which case you are net ahead by keeping it in the 401K rather than forgoing the match
Also, even the crappiest 401k plans have a few "passively managed" index'y mutual funds with relatively low fees (in the range of 0.1%/year) that you can choose.
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"in the long run, your typical investor is going to get the same return with active management with 2% fees as he does with an index fund at 0.1% fees." This point is extremely contentious. Particularly in the long run, there is a lot of data to show that actively managed funds do not beat market indexes. With fees, they come out considerably behind.
True, but one thing a financial advisor can do is counsel you through market volatility. Absent this, many unskilled investors will fall into a "buy high, sell low" pattern and end up FAR worse off.
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Sadly, you can only roll it over during a 'qualifying event' which is either you leave the company, the company drops the 401k, or reach the minimum age for disbursement. The most common case is people leaving the company. I've known too many people who change jobs and just leave the 401k they had in their previous job with the company that is still managing the 401k for the old company. There can be (and often are)…
There's no such thing as a 'qualifying event' for a rollover. See for yourself: ' http://www.irs.gov/taxtopics/tc413.html Don't confuse the "plan documents" (aka the terms of service written by the bankers with their hands in your pocket) with the IRS regs. Some plans do allow in-service rollovers, and to be sure, you should make a request in writing. When rolling over money, have the money sent directly to the other…
Publication 560 defines when distributions from 401(k) plans can be taken (page 18): http://www.irs.gov/pub/irs-pdf/p560.pdf
A rollover is nothing but a distribution and re-deposit into a qualifying account.
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So... why not buy a Vanguard index fund, which is currently charging 0.07% for a management fee? The difference between a 2% management fee and a 0.05% management fee from Vanguard's Total Stock Market Index... or 0.09% fee from SPY ETFs (+$7/trade from your typical broker). Run the math, if you are paying 2% fees, you are getting straight up robbed. If your employer doesn't offer low-fee index funds, it would be wor…
Hmm. Both Google and my fund options page at Vanguard list the Total Stock Market Index as having a 0.17% expense ratio: https://www.google.com/finance?q=MUTF:VTSMX Are we talking about different things?
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Well, I thought the point was that even an S&P-500 fund will suck some money away from you through fees. I wonder at which point it makes most sense to dump the fund and do just SPDR ETFs instead.
>I wonder at which point it makes most sense to dump the fund and do just SPDR ETFs instead. At any given point in time, an ETF will have the lowest fees compared to other options (mutual fund, professional money management fund, etc). There is no "breaking point" in which it makes sense to switch. If given your parameters, investment objectives and desired sector exposure tell you that an ETF and another option are…
An ETF allows you to buy/sell at any time throughout the day, while a mutual fund lets you buy fractional shares, and make atomic transfers to other funds. ETFs have a bid/ask spread, while mutual funds trade at the day's closing price.
If you do frequent trading, then ETFs are the obvious choice (but frequent trading is generally a good way to lose money.)
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Sadly, you can only roll it over during a 'qualifying event' which is either you leave the company, the company drops the 401k, or reach the minimum age for disbursement. The most common case is people leaving the company. I've known too many people who change jobs and just leave the 401k they had in their previous job with the company that is still managing the 401k for the old company. There can be (and often are)…
There's no such thing as a 'qualifying event' for a rollover. See for yourself: ' http://www.irs.gov/taxtopics/tc413.html Don't confuse the "plan documents" (aka the terms of service written by the bankers with their hands in your pocket) with the IRS regs. Some plans do allow in-service rollovers, and to be sure, you should make a request in writing. When rolling over money, have the money sent directly to the other…
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I'm starting to see a striking similarity between the financial products industry and the social gaming industry. Both sectors (at least traditionally) have a large fraction of their business derived from unsophisticated, unaware customers, whether it be 401k users or social gaming "whales". "Business" in general seems to be bimodal in making money from (a) providing value to sophisticated players, or (b) gouging the…
> "Business" in general seems to be bimodal in making money from (a) providing value to sophisticated players, or (b) gouging the unsophisticated players (long tailing it) with a shitty product. This is much of the consumer products/services industry these days. See, e.g., Applebee's.
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>I wonder at which point it makes most sense to dump the fund and do just SPDR ETFs instead. At any given point in time, an ETF will have the lowest fees compared to other options (mutual fund, professional money management fund, etc). There is no "breaking point" in which it makes sense to switch. If given your parameters, investment objectives and desired sector exposure tell you that an ETF and another option are…
ETFs are different, not strictly better. Given an ETF and mutual fund with the same expense ratio, the choice is simply a matter of preference. An ETF allows you to buy/sell at any time throughout the day, while a mutual fund lets you buy fractional shares, and make atomic transfers to other funds. ETFs have a bid/ask spread, while mutual funds trade at the day's closing price. If you do frequent trading, then ETFs a…