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Subject:  Re: Tracking Mutual Funds Online Date:  9/26/1998  11:00 AM
Author:  TMFPixy Number:  5652 of 104849

IF writes:

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.

IMHO many more but never all 401k plans will use internet access to allow participant transactions and monitoring. Just remember that doing so is not a cheap thing to do, and that cost almost certainly will be passed on to 401k participants. That cost will futher denigrate return performance. Convenience has its drawbacks.

As to market timers, that issue has been examined exhaustively in plans that use daily pricing and have both telephone and internet account change capability. These studies reveal consistently that less than 5% of folks do anything when the markets shift. For that reason, IMHO the issue of market timing within 401k plans is one without merit..


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