Mapgirl’s Fiscal Challenge

Journey2Retirement has a very personal cautionary tale about rolling over a 401K plan into your new employer’s plan. I thought this was a very important article about doing your due diligence before going to a new company. My additional tip is that you usually have 90 days to take a rollover withdrawl from your old company’s 401k plan. Use the first 90 days at your new job to find out all you can because you may be better off staying in your old plan, or converting to a traditional IRA instead. (This assumes you aren’t anywhere near retirement age.)

My own story:
I had money at Fidelity with my old company. My new company has an investment company that is primarily known as an insurance firm, whom I find hateful and annoying for reasons I will explain.

1) The funds in the new company’s plan were managed mostly by firms I’d never heard of, which is scary since I used to work for a financial research provider and I have heard of nearly every mom and pop fund shop imaginable. Therefore I found it a wee bit frightening when I barely recognized the 6-10 fund providers in the plan. (It’s been a b*tch to do my own research on these firms beyond what the plan serves up. I can’t even find the right tickers for a lot of them.)

2) The GUI on the insurance company website sucks. And even though it was redesigned, it still stinks in terms of display and navigability. (I am a user experience snob, so sue me.) Why they have fixed pixel width windows makes me oh so very angry, especially since I can’t view it on my company-issued laptop’s 800×600 screen. There is no way to track a fund’s daily price over time in a pretty graph. Or do a side-by-side fund comparison. While I realize that past performance is no guarantee of future results, I find it useful as a quick and dirty point of comparison which Fidelity’s site allows.

3) They also don’t let you keep your records online indefinitely. Well, who does? Indefinitely is admittedly a really long time. However I’ve been with my current employer less than 2 years and I cannot access online transactions over 18 months old. Therefore, if I didn’t have Quicken, I’d be toast! That’s just crazy not let a person keep at least 2 years’ worth of records.

When I landed at my new company, I was surrounded by former co-workers. Mind you, I barely know these people, but I knew one of them sits on Yahoo Finance all day long, so I made a few small inquiries about which funds he liked and why. Turns out he sees a financial advisor and passed along his advisor’s recommended asset allocation plan for me to view. (He got there a few years before I did, and he’s a little older than me so it’s not THAT crazy to use the same one if we are of the same risk tolerance. Of course I tweaked the allocation to suit my tastes and have changed it over time. Not just a rebalance, but a full on change.)

Since I have to throw my money into the funds in the current plan and I was unsure of the plan choices, I decided not to rollover my old plan into the new one, but left my old funds in a Traditional IRA rollover account instead. At the time, the Fidelity stuff was going great so I didn’t see a reason to leave those funds and join into great unknown expanses of mutual funds I’d never heard of. There didn’t seem to be a point in chasing last year’s returns on funds I knew nothing about. So I used my colleague’s advisor’s advice to pick funds for my new allocation, the plan provider’s risk tolerance quizzes and asset allocation plans, and that was pretty much it.

I can guarantee you that when it’s time to leave this plan, I’ll be pushing all my money into the account at Fidelity. Sure I’ll lose a 10-year top performer of an International Equity fund, but I am not bothered by this in the least. It could all go south quickly tomorrow, and I don’t mean to Tierra del Fuego.

One single thought and one only:

“Damn, I hope it stays low till my 401k contribution kicks in from Friday’s paycheck.”

Nope. When I see a market go down, I think one thing only. “Time to buy!”

That’s really the only thought to have.

Don’t panic if you’re under 60. There is plen-TEE of time for the market to rebound.

I checked the price of mutual funds in my 401K plan for the last few paychecks. I get paid every two weeks and it seems that my S&P fund was buying shares at over $90 a few weeks ago and is now getting them at ~$85. But I also have to remember that when I started this job in late 2005, those same shares were under $75. So I’m still doing quite ok as long as I hold steady with my contributions. (And why is it a year and a half later and I still think of this gig as my ‘new’ job?)

I only wish I had something extra to give to my IRA rollover funds to buy into them. I am thinking of liquidating an REIT fund I should have sold 4 months ago. I am still making 10+% over the 3 years I’ve had those shares, but I could have had over 20% if I sold them when the idea first popped into my head. Oh well, I would have taken that cash and bought into a closed small-cap fund and watched those share prices sink as well, so it’s 6 of one and half a dozen on the losses there. So I am going to wait till after the new year. I will have two dividend payouts then and a rebalance to exit the REIT at that time seems reasonable.

Dong left a comment yesterday about my fortitude in staying 100% in stocks. However, I think I better clarify that.

I am in 100% stock investments via 8 different mutual funds in 2 different accounts and about 5 or 6 stocks for dabbling in active investing and learning about stocks. Let’s just say the latter shows that I’m not a winner. I’d be better giving that over to a chimpanzee with the WSJ and some darts.

But the 8 funds I have go like this:

Account #1 - a 401k Rollover into a private Traditional IRA:
Mid Cap - closed to new investors
Small Cap - closed to new investors
REIT

Account #2 - current 401k:
S&P 500 Index Fund
Large Cap
International
Small Cap Growth
Small Cap Value

(more…)

JD weighs in on index funds. Read the Dowie article link. It’s absolutely incredible reading. I used to work at the place that brought MPT research to many a CFA at these institutions charging high fees. I think that’s part of the reason why I’m not really crazy about most mutual funds. It’s all the same research. Eventually it’s just one guy picking one investment over another. Might as well be Malkiel’s monkey.

Insureblog on healthcare. Couple that with Kay at Don’t Mess with Taxes with the new Bush healthcare insurance proposal.

English Major does the smackdown on David Bach. For what it’s worth, here’s my old book review in two parts.

Donna Jean is my girl. She also puts the smackdown on multiple carnival submitters.

Bauhaus_sea at Financial Fitness on deciding between a 401K and a Roth. Clearly I should be putting some of my money into a Roth! Right now I put it all into the 401k because it’s too easy to do that. Sounds like I should liquidate a portion of my Save-O-Meter to make a contribution to a Roth.

NPR has two stories this morning about credit card rates and new legislation. Yes, I think there is too easy credit available. But I’m a less is more person and on this one, I am not sure that a new law is needed, more than greater consumer education.

Jim is letting me guest blog for him today. Check it out!

Welcome readers of Blueprint for Prosperity! Thanks for stopping by!