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Subject:  Re: Transforming my 401k from Wise to Foolish Date:  9/29/1998  5:35 PM
Author:  TMFPixy Number:  5726 of 103223

Greetings, Vreinoso, and welcome. You wrote:

My employer (like most) gave me very limited options on my 401k - all mutual funds managed by the Wise. With some reservation but not sure I had any other choice, I chose some funds and maxed my contribution.

The good news was I maxed the contributions, the bad news was that I had to turn it over to the Wise to manage -- the fund options included no index funds. Now as the year comes to a close, my employer is considering altering the plan to give us the option to self-manage our 401k.

As fate would have it, the Wise managers of the funds I selected have lost me about 10% of my contributions. The question is should I lock in the loss and transfer the remaining amount to the self-managed option which would allow me to invest these and future contributions Foolishly or do I leave it there until I recoup my losses (who knows when?!) before transferring it to the self-managed account? I have, of course, decided to funnel all future contributions to the self-managed option.

In Foolish principal, I know I must take a long term view, but should I do that as well with money already in the clutches of the Wise?

Obviously, you and you alone must decide. But….(ain't dere always one of dem?) … Over the long term, you can probably do better with your money in the self-directed account. Nothing says you can't wait until your losses are recouped before moving the money from the Wise, but to me that's like trying to time the market. As you said, who knows how long that wait will be? Having it invested the way you want it invested over the years will make today's loss look like a hill of beans in comparison assuming you're modestly successful in your choices. And you'll have the satisfaction of knowing you're in control, not some manager who may or may not be doing what you want done.

Congratulations on working for an enlightened employer who's willing to give employees the ability to call the investment shots. You're very fortunate because most folks don't have that opportunity in their plans.


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