Show HN: Simplifying 401(k) Advice - Feedback?

Then you might benefit from the advice we provide that takes advantage of the "no commission" ETF lists at the leading brokers (Fidelity, Schwab, E*Trade, TD Ameritrade) to start.

http://www.kivalia.com/blog/

Our advice is applicable in a number of ways.

My last company was funded by a another company that was a pioneer in the investment and benefits management world so we had a 401k with automatic 3% contribution from day 1, although no matching contributions unless I stuck around for 2 years. If I was getting matching I would have maxed my contributions, but instead I fully funded my Roth for the year and also started making (non IRA) contributions to a Lending Club account.

I worked for a while at a Uni that had something like a 401(k) which made an automatic contribution of 10% of base pay (on top of what you get paid) that started on day one. By default half of that went to Fidelity and the other half went to TIAA-CREF. I sold out Fidelity and converted my TIAA-CREF to an annuity because TIAA-CREF offered something very different from my other investments.

That's probably the best plan you can get these days, although I'd really be impressed if somebody offered me a defined benefit plan.

Anyhow I'm the kind of guy who buys XIV and doesn't look at the P&L figuring I'll win because the other guys will look at the P&L and blink and I won't.

Thanks, Bradley. Tutorial explanation comment is noted - we have some ideas on that front.

There are a few themes that we're playing on with regards to the advice, and we'll try to express them more clearly on the site as we move forward. These are:

1) Most of the investment options available to participants are really a mix of a number of market sectors...for example, Vanguard Wellington (http://www.kivalia.com/assets/vwelx/vanguard-wellington-inv). The name tells me nothing, but if one evaluates it, it looks like the mix of assets shown at the bottom right of the page referenced above...a mix of stocks and bonds. So we do a good job of mapping what various investments look like.

2) Getting the overall allocation right is the most important aspect of investing...and explains maybe 80% or more of one's overall returns. How much do I want in large cap growth, small cap value, international, etc.? That's incredibly hard for an individual to do when you have a bunch of vaguely named funds. Of course it's much easier to do when one has a list of sector-based index funds to work with.

3) Philosophically we're indifferent between active and passive funds...they're each just combinations of asset classes with a fee tacked on. What's most important to us is the exposure to various sectors a particular fund provides you, after fees.

4) Yes, our algorithms take into account each fund's respective management fees; so all else being equal we'd be biased towards the lower cost (better performing) alternative.

5) Past performance is definitively NOT a predictor of future performance. We simply show results for transparency sake in an effort to allow users to see whether or not we're adding value to the process.

6) We do build in "tilts" to our advice based on expected returns over a substantially long time horizon. These tilts are intended to bias portfolios towards sectors that look more attractive at any point in time, and away from sectors that are less attractive in our view. That said, it is a simple process to tighten down our algorithms to force the recommendations to a more benchmark-y look and performance.

Annoying, isn't it? Every time Frontline or one of the major networks runs a scare story about how much money people are losing due to high fee 401k plans, I get angry. Not so much at the lost money, but that the 'in-depth journalism' never seems to bother with any suggestions on what to do if you're in one of those crummy plans. (To be fair, I guess "quit and go to work for Google or Goldman" wouldn't go over well, either...)

How does this differ from brightscope?