No. of Recommendations: 14
I spent some time reviewing my wife's and my 401K statments from prior employers and was struck by some intellectual lightning and I'd like to share it with the foolish.

My statement had a year end balance of 32K and my wife's is 26K. But thats not really important.

What's important is this: I started 13 years ago, often putting 15% of my income into the 401K. I estimate that I put a total of $27,100 of my hard earned pretax cash into this account. I invested in a mix of company stock (FBF), Dodge & Cox balanced, Putnams New Op's Fund and some others. On occasion, I re-allocated some of the balance. Indexes were not an option.

On the otherhand my wife waited til we met (about 6 1/2 years ago) and I convinced her to get started towards retirement. She saved 15% for about 3 years. I estimate she contributed $14,000 of her hard earned cash. Then she quit working to raise our children. My wife invested simply in Vanguard's Extended Market Account. And never touched it.

So after saving almost twice as much(27K vs 14K) and for far longer my retirement account balance is in the same range as hers. No doubt, if I let it go another 5 years, the improved returns and lower costs from her account would put our balances on par or worse.

Now we'll get to the lightning part: Starting early and often is only part of the equation. YOU MUST MAKE GOOD INVESTMENT CHOICES. And even when you think you've made good ones you better review periodically against a benchmark. In this case the benchmark was my wife's account but the S&P 500 is as good as any.

I'm glad I caught this now and not 20 years down the road. I'm still undecided as to whether I will buy stocks or put the money in a Vanguard Index but what is clear is that I must roll over the money into an IRA. And I must do it soon.

You see the time horizon is important but the rate of return is the true equalizer.

Hope you can learn from this experience.

Bankman
Print the post Back To Top
No. of Recommendations: 0
Well said, Bankman. Spending a bit of time looking at those statements and making a few year to year calculations is certainly a good idea. Your experience demonstates that very well.

Too many file those statements with very little thought about them. They give up the chance to learn a bit and maybe even improve performance and figure out which investments work for them.

Fool on!!

Thanks for sharing.
Print the post Back To Top
No. of Recommendations: 0
Now we'll get to the lightning part: Starting early and often is only part of the equation. YOU MUST MAKE GOOD INVESTMENT CHOICES. And even when you think you've made good ones you better review periodically against a benchmark. In this case the benchmark was my wife's account but the S&P 500 is as good as any.

Excellent point, but let me ask did DW make good choices, or just lucky ones? Did she research that fund? Did you research your funds? Has she watched her fund over the last 3 years? Did you watch your funds for all 13 years? If y'all did not do the work, then the results are luck, good and bad. If you did do the work, then you should rub the magic lamp and hope a little of her smarts rubs off on you!

Fuskie
Who reminds you that another 10 years, a lot can happen for both you and DW...
Print the post Back To Top
No. of Recommendations: 0
Good advice Bankman. I learned my lesson when I lost over 50% of my 401K in the year 2000 because I had it all in a tech fund. Now I have "PORTFOLIO ALLOCATION" tattooed on my eyelids! Lucky fyou can rollover to an IRA because the 401s from a previous employer. I'm not all that happy with my 401K investment choices, so I've got dollars invested in 5 other accounts, Roths, TIRAs, annuity and taxable, but I treat it as one portfolio for allocation purposes. I also track the cumulative rate of return and annualized rate of return for each position in each account and for each account overall.

I like to use the S&P 500 as a benchmark.

Thanks for the learning experience...

2old
Print the post Back To Top
No. of Recommendations: 0
Fuskie,
You raise good questions, but research aside, there are/were stark differences between her offerings and mine. All her choices were Vanguard. I.E.----Low Cost Indexing. My choices were all managed funds or company stock. We both worked for publicly traded companies and hers would not allow her to buy company stock with her 401K.

At the time, Putnam's New Oportunities fund was doing well and I had a few good quarters, but the volitiliy has wiped me out.

Print the post Back To Top
Advertisement