How is my 401k rate of return?

[Leros]

I have my 401k plan setup to auto-manage itself because I don't really know what I'm doing. It currently has my money split into 13 funds.

My rate of return for the past two months was 0.41%. The rate of return for the past 8 months was 1.62%. (I started my 401k 8 months ago)

Seems low to me, but I know the economy isn't so great at the moment.

 

[rocadelpunk]

i've had about 10% return over last 2.5yrs with vanguard target retirement 2050

 

[spidey07]

Ouch. The market has been on a tear the last year. Should be much better than that. You should be 10-15%.

 

[Leros]

I've only started my 401k in the last 8 months, but they show historical data for what sort of returns they have gotten in previous years. The rate of return they show over the past 3 years is about 10%.

What sort of returns did you guys get over the past year and the past few months?

 

[IEC]

You're doing it wrong. You should be 10-15% at minimum.

 

[Kelvrick]

I have vanguard.

Annualized rates of return are:
3.9% past 1 year.
16.7% in past 3 years.

 

[IEC]

"It currently has my money split into 13 funds."

I bet you many of those are actively managed and have high management fees and expense ratios. If you can't care enough to know what you are getting into, you should pick a Vanguard Target 2050 fund or go for Vanguard index funds.

 

[Schfifty Five]

eh, I'm only at a 5% return.

I probably should rebalance my investments.

 

[ultimatebob]

Yeah... my results aren't that good. I only have 1 year returns of about 5% for most of my funds, but 3 year returns of 25-30%.

 

[Leros]

"It currently has my money split into 13 funds."

I bet you many of those are actively managed and have high management fees and expense ratios. If you can't care enough to know what you are getting into, you should pick a Vanguard Target 2050 fund or go for Vanguard index funds.

A few of you have mentioned Vanguard and it sounds like you're getting pretty good rates.

I'm currently doing my 401k through Paychex which is the service that my employer uses for Payroll. My employer currently does not offer contribution matching (although that will probably change in next year or two), so I don't think I currently lose anything by switching to another service.

 

[IEC]

My 401(k) and Roth IRA consist of the following four funds:

FSEMX - Fidelity Spartan Extended Mkt Index
FSIIX - Fidelity Spartan Intl Index
VFIFX - Vanguard Target Retirement 2050
VGTSX - Vanguard Total International Stock Index

These range from 0.10%-0.26% in expense ratios and have no loads (i.e. fees when buying or selling/changing funds).

Whereas it looks like Paychex might be ass-raping you according to this Bogleheads thread:
http://www.bogleheads.org/forum/viewtopic.php?t=76553

 

[Savij]

I'm thirty and have been letting my 401k sit for a couple of years w/o making any adjustments.

I'm at the following rates-of-return:
9.1% year-to-date
0.3% for the last 8 months
21.1% for two years

I looked for the funds with the cheapest fees that had done well over the last decade that were available in the asset classes I chose:
50% - Aggressive mix Blended Fund
18% - Small Cap
17% - Mid Cap
8% - International
7% - Large Cap
*note that this last set of numbers is my allocation by type, not R.O.R.

 

[Jeff7]

Am I doing something seriously wrong? My personal rate of return on my last statement is -3.22%, and I believe it's been negative on every statement since I started.
Did I just start into the 401k plan at a really bad time?
Most of the fund options list projections of negative rates of return for the next few years though, only turning positive at around 10 years from now. My distribution is split up among 10 different funds, a mix of growth, balanced, and bond funds, weighted heavily toward the growth funds.

Mk262 - got to get me some of that. Our expense ratios at work are 1.3-1.9%, depending on the funds selected. The only one with a low ratio (0.14% expense ratio) is a 0% return fund, which is a cash equivalent thing that seems to be like letting them put your money under their mattress.

There is a 50% employer match on the 401k, otherwise I probably would be using something else.

 

[kranky]

OP, I don't believe you have the option of moving your 401k. But you may have the option of investing in different funds. I doubt you need 13 different funds. What choices do you have in your 401k?

Savij, what is the name of the "Aggressive mix Blended Fund"?

Jeff7, funds don't make projections of what they will do in the future. Where does that information come from?

 

[mshan]

I would be more concerned about what actual mutual fund choices are, rather than perfomance over that short a period. If you started investing last spring / summer, market was up at that point, crashed downwards, and is probably getting to same area, so your funds may just be tracking overall market given when you made investments.

Dollar cost averaging (which is what you are doing with 401k contributions with paychecks) is smart, because it is really hard to time market (loser's game ultimately), and uptrend in stock market as a whole over decades to come should be up significantly from where it is now.

I recommend my usual links of good starter info on mutual fund investing:
- http://selectedfunds.com/downloads/SFSuccInv1210.pdf
- "tyranny of compound interest": http://books.google.com/books?id=acSxsst51psC&pg=PA421&dq=tyranny+of+compound+interest&hl=en&sa=X&ei=F6JST_TOENK10AGa15TYDQ&ved=0CDQQ6AEwAA#v=onepage&q=tyranny%20of%20compound%20interest&f=false
- http://www.amazon.com/Personal-Finan...tt_at_ep_dpt_1
- http://www.amazon.com/Common-Sense-M...0815564&sr=1-3
- http://members.morningstar.com/mk/t...paign=nov2009&vurl=http://www.morningstar.com

Good Luck!

 

[ultimatebob]

It's crazy for a new investor to open a 401k and have 13 funds! How can you track that many properly?

 

[jingramm]

It's crazy for a new investor to open a 401k and have 13 funds! How can you track that many properly?

Simple... he doesn't.

 

[Jeff7]

OP, I don't believe you have the option of moving your 401k. But you may have the option of investing in different funds. I doubt you need 13 different funds. What choices do you have in your 401k?

Savij, what is the name of the "Aggressive mix Blended Fund"?

Jeff7, funds don't make projections of what they will do in the future. Where does that information come from?

In the statement, there's a section called "Fund results from a long-term perspective." The table has columns for 1 year, 5 years, 10 years, and Fund Lifetime, all appear to be % rates of return.
Most of the figures in the 1 year and 5 years columns are negative percentages. They turn positive in 10 years and the Fund Lifetime column.
Looks like those are historic rates of return. Ok.

It's crazy for a new investor to open a 401k and have 13 funds! How can you track that many properly?

And for new investors....well, it's kind of a guess to determine which funds to choose. The bit I know about investing came from reading at the Motley Fool website. :\ I just seemed to recall that diversifying is good, rather than keeping all of your money in one place, or in one fund. (Though the funds themselves are themselves made up of multiple investments, right?) The other thing I recalled from fool.com was to buy and hold, though that seems to assume that what you went with initially wasn't pure crap.

 

[sunzt]

I'm at anywhere from 8-10% in my IRA and 401k YTD. My 401k can be more simply described as a 70/30 stock/bond mix, but i recently rebalanced my 401k to more of a 65/15/20 equity/bond/other mix. I still need to fix my IRA cause it's a bit all over the place.

 

[jszklany]

Right now anything that is growing is good imo - as long as you're not in a losing fund. If you're young, target them for growth and do a little research. Remember, it's the long haul.

 

[boomhower]

Last year mine lost 5.58 but from 10-11 to 12-11 it was up 10%. All of the funds are up this year with most around 5%. I'm like you, I let the computer manage it. Over the last five years the average is north of 5%.

 

[velillen]

I have no control over my retirement. Well other picking a fund category (L2040, L2050, "C Stocks", ect). Will say Quarter 3 of last year i love ~30% but in Quarter 4 made up 16%. Q1 and Q2 both had 6-7% gains so i ended the year only losing 200 bucks. And already made it up in this quarter. Thats my third year total. First and Second years i had 6% or so gain in both. So cant complain to much!

i do have the L2040 even though technically the 2050 is what im "supposed" to have. but the returns have been better in 2040 than the 50 so i havent switched funds yet nor do i really see any reason to at this point

 

[Leros]

It's crazy for a new investor to open a 401k and have 13 funds! How can you track that many properly?

I don't, its all automatic. I've had 30 different funds over the course of the past 8 months. 13 at the moment.

Their system supposedly makes adjustments as deemed necessary to earn the maximum return.

 

[dud]

I don't, its all automatic. I've had 30 different funds over the course of the past 8 months. 13 at the moment.

Their system supposedly makes adjustments as deemed necessary to earn the maximum return.

This sounds like a lifecycle fund. My work 401K is in a lifecycle 2025 fund while my and my wife's is in a T. Row Price lifecycle fund.

Your RoR for the last 8 months is very low ...

 

[spidey07]

I don't, its all automatic. I've had 30 different funds over the course of the past 8 months. 13 at the moment.

Their system supposedly makes adjustments as deemed necessary to earn the maximum return.

That's a huge red flag. I suggest you look more into this company and what your options are. talk to hr as well on options.