Earlier quoted context omitted.
I once had an employer who gave away .5% of my 401k every year to a no value add consultant who selected the overpriced funds. I lost 1% every year I didn't roll into an IRA, but it beat having the principal taxed @ 25%. I wonder where the inflection point is where you are better off investing after tax.
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,…
Show HN: Simplifying 401(k) Advice - Feedback?
21–30 of 49 posts
Re: Show HN: Simplifying 401(k) Advice - Feedback?
#22Employer provided 401k plans are great when you receive matching contributions, but otherwise not a very good. They generally have extremely limited investment options. It will be hard to offer general advice applicable to all 401k participants since they will each have a small selection of investment vehicles. The best advice is to make sure you contribute enough to receive the matching contribution, and then immedi…
More and more firms are starting to offer self directed brokerage accounts that you can use within your 401(k) plan. Also in a 401(k) plan you get to purchase mutual funds at NAV which you cannot do through an IRA. I don't believe there is a one size fits all ("best advice") solution to personal finances. Though I do agree with making sure you max the matching.
> Also in a 401(k) plan you get to purchase mutual funds at NAV which you cannot do through an IRA.
I don't believe that's correct. My understanding is that all mutual funds (excl. closed-end funds) must trade at NAV regardless of the type of account they're held in.
Re: Show HN: Simplifying 401(k) Advice - Feedback?
#23I like the general idea -- many company's 401k options range from slightly sub-optimal to terrible, and helping people make the best of whatever choices they face can be very useful. On the UI/UX side, the look and feel is very slick, but I'd like to see some deeper tutorial type explanations for things like beta and risk profiles rather than short "help" style definitions. More fundamentally, it is hard to garner a…
Yea, my biggest problem with my employer 401k is that I can't just invest in a Vanguard low fee fund, but I have to use their 401k management to get my matching funds.
This of it another way. If you put in the least amount possible to max the matching (often 50% of first 6%) and put it into a money market or stable value fund then the "return" (the matching) will exceed the market returns you'd get on any index fund.
Re: Show HN: Simplifying 401(k) Advice - Feedback?
#24Earlier quoted context omitted.
What stinks about switching jobs is most places don't do a 401k for your first 3-6 months.
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 Clu…
>Anyhow I'm the kind of guy who buys XIV
Daily inverse VIX?!? Have you heard the expression "picking up nickles in front of a steamroller"? Not to mention the cost and tracking error.
Re: Show HN: Simplifying 401(k) Advice - Feedback?
#25Earlier quoted context omitted.
More and more firms are starting to offer self directed brokerage accounts that you can use within your 401(k) plan. Also in a 401(k) plan you get to purchase mutual funds at NAV which you cannot do through an IRA. I don't believe there is a one size fits all ("best advice") solution to personal finances. Though I do agree with making sure you max the matching.
> Also in a 401(k) plan you get to purchase mutual funds at NAV which you cannot do through an IRA. I don't believe that's correct. My understanding is that all mutual funds (excl. closed-end funds) must trade at NAV regardless of the type of account they're held in. http://www.sec.gov/answers/nav.htm
From your link:
"That is, the price that investors pay to purchase mutual fund and most UIT shares is the approximate per share NAV, plus any fees that the fund imposes at purchase (such as sales loads or purchase fees). The price that investors receive on redemptions is the approximate per share NAV at redemption, minus any fees that the fund deducts at that time (such as deferred sales loads or redemption fees)."
In 401(k) the loads or purchase/redemption fees are usually waived (with the exception of short term redemption fees which are sometimes imposed for not holding funds at least 30-90 days to discourage people trying to "day trade" mutual funds).
Also, I did forget to mention that, in addition to waiving CDSC charges, large plans can usually qualify for cheaper share classes of the funds. For example Admiral or Signal shares at Vanguard rather than the retail Investor shares.
Re: Show HN: Simplifying 401(k) Advice - Feedback?
#26Earlier quoted context omitted.
> Also in a 401(k) plan you get to purchase mutual funds at NAV which you cannot do through an IRA. I don't believe that's correct. My understanding is that all mutual funds (excl. closed-end funds) must trade at NAV regardless of the type of account they're held in. http://www.sec.gov/answers/nav.htm
From your link: "That is, the price that investors pay to purchase mutual fund and most UIT shares is the approximate per share NAV, plus any fees that the fund imposes at purchase (such as sales loads or purchase fees). The price that investors receive on redemptions is the approximate per share NAV at redemption, minus any fees that the fund deducts at that time (such as deferred sales loads or redemption fees)." I…
Right, there can be fees imposed on top of the fund's price itself but that doesn't mean the fund isn't trading at NAV.
Re: Show HN: Simplifying 401(k) Advice - Feedback?
#27Earlier quoted context omitted.
From your link: "That is, the price that investors pay to purchase mutual fund and most UIT shares is the approximate per share NAV, plus any fees that the fund imposes at purchase (such as sales loads or purchase fees). The price that investors receive on redemptions is the approximate per share NAV at redemption, minus any fees that the fund deducts at that time (such as deferred sales loads or redemption fees)." I…
Right, there can be fees imposed on top of the fund's price itself but that doesn't mean the fund isn't trading at NAV.
Well, I said "purchase" rather than "trading". And you can't purchase at the NAV price if they're adding fees on top of it.
Re: Show HN: Simplifying 401(k) Advice - Feedback?
#28I like the general idea -- many company's 401k options range from slightly sub-optimal to terrible, and helping people make the best of whatever choices they face can be very useful. On the UI/UX side, the look and feel is very slick, but I'd like to see some deeper tutorial type explanations for things like beta and risk profiles rather than short "help" style definitions. More fundamentally, it is hard to garner a…
Yea, my biggest problem with my employer 401k is that I can't just invest in a Vanguard low fee fund, but I have to use their 401k management to get my matching funds.
That seems like a complete conflict of interest. Do you mean that they require you to have your account managed, for a fee, in order to get matching funds?
Re: Show HN: Simplifying 401(k) Advice - Feedback?
#29Earlier quoted context omitted.
Yea, my biggest problem with my employer 401k is that I can't just invest in a Vanguard low fee fund, but I have to use their 401k management to get my matching funds.
That seems like a complete conflict of interest. Do you mean that they require you to have your account managed, for a fee, in order to get matching funds?
No, we just have to choose from a list of funds that are in our Fidelity account. I just pick the one with the lowest fees, but they aren't quite as good as a Vanguard fund.
Re: Show HN: Simplifying 401(k) Advice - Feedback?
#30Earlier quoted context omitted.
That seems like a complete conflict of interest. Do you mean that they require you to have your account managed, for a fee, in order to get matching funds?
No, we just have to choose from a list of funds that are in our Fidelity account. I just pick the one with the lowest fees, but they aren't quite as good as a Vanguard fund.
Well, that's exactly what Kivalia does; helps you decide which funds to own at any point in time - and how to combine them. Of course you have to create the list at Kivalia, but then you're good to go - immediately and quarter after quarter.