(Updated)Is it just me or do 401ks seem more and more like failed idea.

[Darkstar757]

So ive been looking at my statements and mind you I am following a conservative approach in my investing. Over the last year both of my account are almost 7% in the negative. How in the **** am I going to be able to retire if this keeps up. I am really getting sick of hearing from companies that your 401k is your retirement plan etc. I am not 40 yet and I can see this is really not going well for me. I also know this is not just impacting me.

:hmm:


Update 10/15/2015

I wanted to thank everyone for the well thought out responses. I currently just put my 401k in the JPmorgan Retirement fund. They have funds that have years that are associated with your retirement date. For example mine is 2045 so I am 100% in JPmorgan(2045) fund. Any thoughts?

 

[repoman0]

So ive been looking at my statements and mind you I am following a conservative approach in my investing. Over the last year both of my account are almost 7% in the negative. How in the **** am I going to be able to retire if this keeps up. I am really getting sick of hearing from companies that your 401k is your retirement plan etc. I am not 40 yet and I can see this is really not going well for me. I also know this is not just impacting me.

:hmm:

If you are picking good investments (the simplest of which is just an S&P 500 fund), you should have roughly doubled your money in the past 10 years, regardless of a 7% drop in the past year.

http://finance.yahoo.com/echarts?s=%5EGSPC+Interactive#{"range":"10y","allowChartStacking":true}

You need to look at longer term ....

 

[lxskllr]

Also, now's the time for gambling. Pick riskier/higher potential return now, and go more conservative in 10-15 years.

 

[s0me0nesmind1]

This has obviously been a bad year. Basing your ENTIRE 401k results on a YTD performance is the stupidest thing you can do.

How old are you? How long have you been investing? Ever pay attention to important things like dividends?

Yes, this is just impacting you. Put all your money in an aggressive Index fund (assuming you are less than 40 years old, especially) and don't look at it for 5 years.


tl;dr: You're doing it wrong.

 

[Darkstar757]

I am 35 and I have been putting most of mine in targeted retirement funds like JPmorgan {insert retirement date} etc.

 

[s0me0nesmind1]

I am 35 and I have been putting most of mine in targeted retirement funds like JPmorgan {insert retirement date} etc.

How long have you been contributing since?

How much have you managed to put aside up until now?

 

[brianmanahan]

you could always find an employer that has a pension and work there

there's still a few of them around

 

[OutHouse]

. Put all your money in an aggressive Index fund (assuming you are less than 40 years old, especially) and don't look at it for 5 years.

you should check your portfolio performance at least once a quarter.

 

[s0me0nesmind1]

you should check your portfolio performance at least once a quarter.

The entire purpose of a target retirement fund is to prevent exactly that... Making horrible decisions just because the entire market takes a dip. Looking at statements can often cause irrational behavior from some people.

I'm not talking about your savvy investor. I'm talking about OP and your average person.

 

[deadlyapp]

I've been completely ignoring my statements this year on the pure basis that the market has been all over the place. You can't look at performance this year. If I look overall since I started investing (~4 years ago) I'm up an average of around 12% / year IIRC.

 

[pete6032]

Yep I am invested in a few mutual funds that are diversified across the entire market. I look at my portfolio once per year and rebalance as necessary.

Stayimg the course is the thing to do.

 

[rh71]

This has obviously been a bad year. Basing your ENTIRE 401k results on a YTD performance is the stupidest thing you can do.

Curious how everyone's doing for the year... I'm -1% YTD. Not that aggressive with it.

 

[Darkstar757]

I def have not be touching my investments as I know im not savy enough to move things around and not get burned. I almost try to put in between 8% and 10% my salary since I was around 25 or so.

 

[IronWing]

401K plans are the least bad choice. The main issue I see is that the plans have caused permanent inflation in the equities market. Blind money pouring in every month will drive the P/E ratios higher as the plan managers have to invest that inflow every month regardless of how high the ratios go. However, with the Fed keeping interest rates below the rate of inflation, we lose money standing still.

 

[Darkstar757]

401K plans are the least bad choice. The main issue I see is that the plans have caused permanent inflation in the equities market. Blind money pouring in every month will drive the P/E ratios higher as the plan managers have to invest that inflow every month regardless of how high the ratios go. However, with the Fed keeping interest rates below the rate of inflation, we lose money standing still.

What should we do?

 

[ghost recon88]

Max out Roth IRA + employer 401/403 contributions is what I'd recommend.

 

[local]

I haven't looked at mine in so long that I forgot how to do it.

My first contribution went in the same week we hit our high before the bubble burst so since I had almost nothing in it I played around and wound up at +325% over three years. Grand total in my account after that time? About $2k. After that I just set it and forgot it as I'm pretty sure I would lose it all if I kept playing.

 

[brianmanahan]

401K plans are the least bad choice. The main issue I see is that the plans have caused permanent inflation in the equities market. Blind money pouring in every month will drive the P/E ratios higher as the plan managers have to invest that inflow every month regardless of how high the ratios go. However, with the Fed keeping interest rates below the rate of inflation, we lose money standing still.

401ks only make up about %10 of the US equities market though, last time i checked

 

[IHateMyJob2004]

They were invented by Wall Street and if you are 20, about half your money will go into the hands of Wall Street.

So ya, I say fuck 'em and give me my god damned pension.

 

[sao123]

What should we do?

Get a real job with a Pension or the Railroad.
Vote out politicians who insist on replacing Pensions with 401K's.
Play the powerball, daily.

 

[kt]

Curious how everyone's doing for the year... I'm -1% YTD. Not that aggressive with it.

I haven't looked at mine for the last 6 months and just took a quick peek at monthly balances since last year. It's going up and down like a yo yo but somehow as of today my YTD is +7%. No idea how that happened but my portfolio is well diversified.

 

[Spacehead]

Several years ago the company i work for got rid of the 401k we had so everyone is on their own.
I know there a a lot of guys that have zero to next-to-zero saved for retirement.

 

[brianmanahan]

They were invented by Wall Street and if you are 20, about half your money will go into the hands of Wall Street.

not if you have access to low ER funds

my average ER is %0.10, so in 50 years wall street will only get about %5 of my money:

(1 - .1/100)^50 = 0.9512

 

[who?]

401ks were invented because staying with the same job for 30 to 44 years isn't expected anymore and traditional pensions don't transfer from job to job.

 

[postmortemIA]

not if you have access to low ER funds

my average ER is %0.10, so in 50 years wall street will only get about %5 of my money:

(1 - .1/100)^50 = 0.9512

5% of million is a lot..

401ks were invented because staying with the same job for 30 to 44 years isn't expected anymore and traditional pensions don't transfer from job to job.

OR maybe it was made to save companies money. Instead of employers putting money into pension pool and employees doing nothing, now employers are putting half of into their own stock and employees are paying the rest.