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Investing/Strategies / Retirement Investing
|Subject: Re: Tracking Mutual Funds Online||Date: 9/24/1998 11:15 PM|
|Author: IndecisiveFool||Number: 5624 of 77872|
If - and only if - the funds used within your 401k are the same as ML offers the public will it be possible for you to track that fund's performance on a daily basis. You indicate the one you're interested in is a proprietary fund, or one not open to the general public. Generally, unless the fund manager chooses to publish such information you won't be able to track the performance of this kind of fund until you receive your 401k statements. That receipt may be quarterly, semi-annually or annually. Few 401k plans issue monthly statements. OTOH, if you use funds that are sold to the public, then you can use any portfolio tracker to check on them daily simply by entering their ticker symbol.
Be aware that when trying to track your 401k performance you will only be able to approximate that return within any given year for a number of reasons. First, public funds often have different expenses when available within a 401k. That difference will have an effect on the share prices within the 401k versus that published for the same fund in a public setting. Additionally, you will almost certainly have other administrative charges levied by the plan itself, which will reduce the value of your shares. These charges are not reflected in the public fund's numbers.
Next, any return is time-sensitive. You have to know the starting date to measure it. In a 401k, that means you have to know precisely when your contribution was deposited into the fund. It isn't the day the deduction was made from your paycheck because companies vary in when they remit that deduction to the plan. It can be up to the 15th business day of the month following the month the money was taken from your paycheck. Until you get that statement, you don't know when the money hit the account.
For these reasons, IMHO the best way to measure 401k performance for your particular account is once each year as of the date of a statement you receive. You know what the beginning balance was, you can account for the timing of deposits, and you know what the ending balance is. With that date you can compute an accurate return for you personally. Other calculations based on approximations are just guesses..
For some 401k plans, it is possible to follow the performance daily. My wife and I work for different companies. Each company has a 401k plan that allows you to access your 401k plan through the internet. Some of the services they provide is changing the investment options, redistribution of account balances, checking account balances, and submitting loan applications. Account balances are usually based on previous day fund values. The only thing we are not allowed to do through the internet is increase the total contributions that are taken out of each paycheck.
The ability to do account management on the internet is a recent event. Both of our 401ks only permitted access last month. I would expect that in the future more 401k plans will allow all account transactions to be completed on the internet.
That said, I think there should be some concern that internet access is allowed. 401k plans are designed long term investments for retirement. Having easy access to the account may encourage people to try to time the market and readjust their accounts based on how the stock market fared yesterday. Chasing up or down trends in the market may have an adverse effect on returns.
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