How is my 401k rate of return?

[SagaLore]

Well since a 401k is pretax, as long as your return is positive, my opinion is you're doing well. My stupid 401k dropped almost 40% since I started it so I would have been better putting that money into a savings account. :/

 

[misle]

This calendar year - 8.5%
Over the last year - 5.5%
Over the last 2 years - 18.6%

 

[ultimatebob]

Simple... he doesn't.

At least he's not investing in an IRA... Most of his funds would be below their minimum investment thresholds, and they would be charging him all kinds of fees and penalties.

 

[Elbryn]

Well since a 401k is pretax, as long as your return is positive, my opinion is you're doing well. My stupid 401k dropped almost 40% since I started it so I would have been better putting that money into a savings account. :/

when/what are you investing in? -40% almost sounds like you locked in 2008-2009 losses by selling out of equities or something considering the markets are about where they were pre crash

 

[Elbryn]

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.

not great. we got about 4% the last two months.

 

[overst33r]

Something isn't right with your allocation/funds.

My RoR for the past 3 years is 21.1% using just one fund, VFIFX. I did nothing.

 

[Exterous]

"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.

Agreed. I highly recommend doing some reading on the subject. This shit can cost you a lot of money

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.

I am by no means an expert but John Bogle makes some very compelling arguments for low expense index funds. You may want to head over to Bogleheads for some light reading Definately helped me start on a better investing path (figuring out stock/bond ratio - helping me realize how bad some of the funds were with their loads and expense ratios)

 

[Fingolfin269]

Here's what mine looks like...

5-year 6%
3-year 19%
1-year 2%
Current year ~10%

I think it looks ok but wish I could have done something to avoid some of the drops over the last year. I just feel like I'd probably make it worse if I screwed around with it.

 

[Savij]

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

It is one that is specific to my employer. It's described as:
Employer Pre-Mix Aggressive Portfolio - "Pre-Mixed Investment Portfolios are diversified portfolios of stable value funds, bond funds, domestic and international stock funds, and real estate funds that are designed for optimal performance, relative to their risk, under various market conditions...."

Just to be clear, the 50%, was how much of my contribution goes to that fund, not the rate of return.

 

[kranky]

It is one that is specific to my employer. It's described as:
Employer Pre-Mix Aggressive Portfolio - "Pre-Mixed Investment Portfolios are diversified portfolios of stable value funds, bond funds, domestic and international stock funds, and real estate funds that are designed for optimal performance, relative to their risk, under various market conditions...."

Just to be clear, the 50%, was how much of my contribution goes to that fund, not the rate of return.

Hard to tell exactly what might be in a fund like that. I would suggest trying to get more information about the mix of investments in that fund so you don't end up with a poor allocation when combined with your other funds. For example, if this Aggressive Mix fund happens to be heavily concentrated in small caps and midcaps, you probably wouldn't want your other 35% in small caps an midcaps. You'd be too unbalanced.

 

[alkemyst]

what the market has been doing the last two months this has got to be a troll post. in even my worst account I made $500 on a $10k investment in both January and February (technically $10,500 in that month and also a little more)

 

[Savij]

Hard to tell exactly what might be in a fund like that. I would suggest trying to get more information about the mix of investments in that fund so you don't end up with a poor allocation when combined with your other funds. For example, if this Aggressive Mix fund happens to be heavily concentrated in small caps and midcaps, you probably wouldn't want your other 35% in small caps an midcaps. You'd be too unbalanced.

Good point, but I'm prepared for a decent amount of risk at the moment. I just looked through that fund's holdings and it overlaps with some of my choices. When I was choosing the allocations, I was considering basically double the allocations of the non-blended funds I have. In the end, I chose a 50% allocation in the blended fund as a hedge since I'm relatively unsophisticated in these things.

Overall, my choices and the blended fund have been pretty close. The blended fund is now 49.60% of my 401k after two years of receiving 50% of the contributions. It grew, but not quite as fast as some of the other stuff I chose.

My plan is to let it sit for another 3 years then think about adjusting where some of the money is. I'm 35 years from retirement so I'm not too worried about to much risk at the moment.