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401K Hell

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giacona
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401K Hell  Reply with quote  

I need some help with my 401K. I had some really good funds, however the 401k committee at my employer made changes to the plan and eliminated all of the good performing funds I was in. Currently all my money is sitting in a 2060 target retirement fund.

The only stock investments that are now available are VITSX, MATIX, DODWX, HLMIX. and VFWAX. i am leaning towards moving all my money into VITSX, or putting 50% in VITSX and the other 50% in MATIX.

I am also going to inquire next week to see if my plan allows a rollover to an IRA while I am still employed. This way I can choose my own investments. I won't do this unless there are no penalties or taxes.

I would appreciate any advice on what the best approach would be here

Thanks
Post Sun Jan 20, 2019 6:54 pm
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oldguy
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Based on your age, I would be 100% in the VITSX. Three reasons - 1, it is unmanaged, and 2, it is widely diversified.
1. History shows that only 15% of fund managers beat the SP500 Index (which has a longterm average of 11%/yr). That means that you'll do better by directly owning the index. And it makes sense, the fund managers are trading those same 500 major companies that are in the SP500 Index; they would need to get about a 14% return (3% for overhead and 11% for you) - and it is extremely difficult to get 14% from a group of stocks that earns 11%/yr.
2. Diversity- the SP500 or the VITSX Total Market diversifies you across the entire American and much of the world companies.

Most of us are given about 30 years for wealth-building, age 30 to 60. After 60 you need to shift toward wealth- preservation, ie bonds, bond funds, CDs. That means that it is important to stay fully invested in equity items during the 30 to 60 era - no income products, CDs, bonds, etc.
Post Sun Jan 20, 2019 8:41 pm
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oldguy
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Cash: $ 750.25

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I am also going to inquire next week to see if my plan allows a rollover to an IRA while I am still employed.
quote:


I'm pretty certain that the answer is 'no". And it's not your company plan rules, it is federal Law, section 401k of the Tax Code.
Post Sun Jan 20, 2019 8:45 pm
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giacona
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Thank You. I have decided to go all in with VITSX. I believe it will be better long term.
Post Sat Feb 02, 2019 6:44 pm
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