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Greetings!

I only recently became eligible for my company's 401(k) but have very quickly become rather disenchanted with it. I have chosen its Value & Income fund (DVEIX), but started wondering about its Stock Index fund (DSKIX).

To me, the index fund looks less promising. It's current value is less than half that of the value/income fund and doesn't appear to be performing as well.

Am I being Foolish keeping it where it is? And what about diversifying? I hear a lot about that, but, especially with the funds my plan has to offer, doesn't really look like a good idea.

By all means ask me any questions if the above isn't being clear enough. I'm intrigued to see what others think I ought to do so early in the game.

Thanks!
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It's current value is less than half that of the value/income fund and doesn't appear to be performing as well.

By "value" do you mean price? The price of a mutual fund is meaningless...it is the total value of the assets in the fund divided by the number of shares, but the number of shares is arbitrary.

Nothing much has been peforming well over the past 18 months. (Yes, Virigina, there is a bear market.) You need to think in terms of decades, not months, in your 401k.

Ususally, a broad market index fund in the long term will beat most of the managed funds available (particularly a Value and Income fund, which probably isn't really trying to beat the S&P500), in part because it is cheaper to manage and, in part, because the folks who manage funds usually aren't really smarter than everyone else, at least when it comes to investing. So index funds are often the way to go, depending on which index your employer offers.

And what about diversifying?

It's probably a good idea to spread things around a bit, so one idiot fund manager doesn't ruin your entire retirement :). Without knowing more about you (your age, your other assets, etc) and your 401k plan (the funds available, etc), any specific advice about diversification would just be guessing.

Good luck,
JDOyster
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Greetings MartinCahn,

To me, the index fund looks less promising. It's current value is less than half that of the value/income fund and doesn't appear to be performing as well.

Now, did you note that the value fund's managers started at the end of 1999? Do you wonder if the market is going up how well this fund that has a value bias will do? I know I would as since March 2000 value has done better than growth but that is subject to change in the future.

Am I being Foolish keeping it where it is? And what about diversifying? I hear a lot about that, but, especially with the funds my plan has to offer, doesn't really look like a good idea.

I don't know. Did you want something that would be conservative on both up and downside? Do you not feel comfortable riding the market? Let's not forget that if this was before 2000 that you'd be looking at a fund that underperformed the index under its former managers for 5 whole years. http://quicktake.morningstar.com/Fund/TotalReturns.asp?Country=USA&Symbol=DVEIX shows this by that green line going much higher than the red I believe.

The idea of diversifying is a good one but it does matter which options and strategies you care to implement since some people may use a dozen or more funds to get their idea of diversified while others may be comfortable in only one fund depending on the holding(VASGX for example has a ton of stuff in its portfolio).

By all means ask me any questions if the above isn't being clear enough. I'm intrigued to see what others think I ought to do so early in the game.

I think the key point here is to get that there are styles that may be more or less aggressive then the general market most of the time. When I say most I mean that there are times when value can get smashed up as noted in http://news.morningstar.com/doc/article/0,1,5643,00.html

JB
(Who is still 401kless...)
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Well, I just found out something that may change things a bit. My company's 401(k) program is NOT employer matching. That means, of course, that I am the only one contributing to it.

Also, I didn't provide a whole lot of particulars when I posted this thread originally.

I'm 36, married, with two children under 14 months of age (adopted), our combined income is <$45,000, and we have virtually no savings to speak of.

So, with that in mind (and if you need more info, by all means let me know), does it really pay for me to participate and/or move that IRA money to this particular 401(k) program, or should I invest it in something else?

Thanks!
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