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Like everyone else out there, I’ve been horrified to watch my 401k go down the toilet over the last year.  Like a dutiful soldier I plodded on and continued to chip in my 10% worth, and was handsomely matched 2% for my effort (sarcasm intended).   While the market continued to go south, I kept telling myself that it’s okay, this is what happens, conventional wisdom states that if you put your money in the market it will earn 7-8% over the long term. 

As of today I do not think I can believe in conventional wisdom.  While the market has lost something akin to 50% over the last year, my rate of return on my 401k from October 16, 2006 to February 23, 2009 has been -70.17%.  

I haven’t been out there picking The Biggest Losers, on the contrary, my money was invested in a variety of funds that were offered to me through my 401k provider.  Names like Maxim, Goldman Sachs, Dreyfus and Oppenheimer to name a few.  25% of that money was always invested in a Maxim S&P Index Fund.  So how the hell did I lose 70.17% on every dollar that was contributed to these funds?   Simple answer, I don’t know.  I’m one of those people that contributed like I was supposed to, diversified in funds like I was supposed to, left my money in the hands of those who knew better, and took their fees for managing my 401k funds while grinding my returns into dust. 

I have recently left that job, so I was rolling over this money anyways, but my recent experience looking at that return over the life of my 401k has given me great pause over putting my money into mutual funds again.  At one time, Home Depot breathed life into the do-it yourself industry.  I believe that this experience has taught me the same.   Rather than put my money into mutual funds so someone else can diversify my money, I’d rather pick out my own investments into great companies, save myself the fee and control my own financial destiny.

Conventional wisdom be damned. 

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