If you are not maxing out on your 401k, you have an opportunity to easily put in an additional 2% in 2011 because of the cut in the payroll tax. This advice comes from "Getting Your Financial Ducks in a Row." If you are maxing out on your 401k contribution, then you should consider putting it into a Roth or even a taxable account, Jim Blankenship says.
Polls show that the biggest financial regret seniors have is that they didn't save enough.
Have a HAPPY NEW YEAR!!!!!!!!!!
Depends on who your 401K custodian is. I would hate to put a penny more in my 401K other than what's matched but I would max out my ROTH. 401K has a really bad selection of funds, all kinds of fees, 2.5 ERs are not uncommon... just a vehicle for Edward Jones to rip off people.
ReplyDeleteHappy New Year!
Good points. For couples they should look to see which 401k to use to increase contributions.
ReplyDeleteAlso, think about lobbying to change 401k providers. Go to www.brightscope.com and see if your company 401k is rated. If so you have hard evidence of how bad it is.
FYI: 401k administrators are fiduciaries and as such have legal responsibility to show they are attempting to provide low cost funds to participants.
Actually I did have a chat with the EJ guy! In fact I remember asking him why I don't have a simple index fund that tracks the S&P at the beginning of last year and he said, 'S&P is going nowhere - no one wants that'! S&P has done better than all his funds put together!
ReplyDeleteWhen I questioned him about the fees and compared the funds offered by Vanguard, his face changed (Apparently no one in this industry likes the big V!)! He actually said, EJ has to charge the fees so that he can provide the service he is providing! (He doesn't know I'm a finance blogger!)
That was the end of the conversation.
I don't know what to say except to badger your employer to change providers and/or type of plans.
ReplyDeleteMy daughter worked for a company that used Morgan Stanley and she was getting horrible, expensive advice.
Her company realized it and changed to using Simple IRAs (company needs less than 100 employees). The IRAs are at Schwab and are self directed. She uses low cost ETFs! Had a great year. As a young person she is well on her way to accumulating a nice nest egg.
By the way, from her perspective it would actually be better if the market drops. She is in the accumulation mode.
I know - someday I need to sit down with my HR. I think from an employer's perspective EJ is a good choice since they pass on all fees to the employees!
ReplyDeleteI would love to have either Fidelity, Vanguard or Schwab as our provider - atleast I have an option of choosing ETFs!
I totally agree about accumulation! Bad years are a boon for young investors if only they understand why and stay invested!