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Utopia Talk / Politics / Placing my 401K into another fund?
kilo
Member
Thu Feb 07 11:09:45
32 Years old with 60K in my 401K. My job currently has their 401K through Fidelity.

Right now I have 100% of it in the Fidelity Freedom 2050 fund (FNSBX) which consists of...

Domestic Equities 59.89%
International Equities 31.47%
Bonds 7.59%
Short-Term Debt & Net Other Assets 1.05%

The fees are at .65%


I'm wondering if I should put it all into the Fidelity 500 index fund which mainly consists of stocks, which fees at .015%. My risk tolerance is pretty high.
Average Ameriacn
Member
Thu Feb 07 11:15:52
Do it, the Trump economy will make you super rich if you invest in stocks.

An don't forget to thank him with your vote in 2020.

MAGA
TJ
Member
Thu Feb 07 12:33:37
Employer sponsored plans have benefits for the employer as well for the employee. How many plans does your employer offer? I think you'll find them to be restricted. How long does it take for you to change company authorized plans compared to how long it would take you to terminate that 401k plans.

Penalties are hefty if you chose to liquidate and reinvest outside of your company plans prior retirement. There are reasons for that setup and it isn't only to assure you save for the future. You think there might be some undisclosed reasoning on the part of the employer? Company risk...

You can also setup a Roth IRA at the same time you belong to a 401K employer plan. It allows you to invest more than the government/employer allows you within the 401k if I'm not mistaken. Defer your taxes in a 401k and pay your taxes on the Roth IRA. It will provide you flexibility in retirement. Put the limit in both if possible and delay unnecessary spending as much as possible to manage.

The employer shoulders the risk with 401k's . With an individual Roth IRA the flexibility becomes yours alone and you can be as risky as you wish.

I'm fairly certain that only a self employed individual can setup a solo 401k plan.
kilo
Member
Thu Feb 07 13:04:14
Well I'm setting up a Roth IRA with betterment, a robo advisor online. Heard get reviews on it, but kinda skeptical on the robo advisory thing.
jergul
large member
Thu Feb 07 13:16:50
Kilo
You play poker, right? Even good players will end up handing 1/3 of their earnings to the house over time. Its a racket.

Fees are the rake. They have to be as low as possible. That means index funds if available.

To beat the market, keep a 40 equities - 60 bond split at all times (its a buy stocks when low, buy bonds when stocks are high strategy). This is what the Norwegian Sovereign fund does.

.65 is too high. Aim for .20.
jergul
large member
Thu Feb 07 13:18:23
This is not my advise btw. The Norwegian Consumer Protection Agency did a pretty solid analysis and reached those conclusions.

Its also the moral thing to do. Why pay investment brokers money? They suck.
TJ
Member
Thu Feb 07 13:24:50
You can open a Roth IRA pretty easily with a bank, broker, insurance agent, or custodian licensed to accept retirement assets.

Research the differences between a traditional and Roth IRA.
TJ
Member
Thu Feb 07 14:23:24
My posts consist of honest money management advice. Apply it or ignore as you choose, either way, I'm not at risk like you, your employer and government.

Company 401k plans don't give you an option other than pre/post paid tax options and to take or reinvest dividends annually. They must not touch your hands in the transition or you'll be subject to tax and penalties. The government is going to get its take sooner or later.

At retirement your 401k must be turned directly over to another money manager. Money managers aren't fond of maintaining brokerage accounts from companies and will charge you more to maintain. The average person will never discover additionally hidden costs. The money manager will pressure you to make changes in your retirement investments from those previously restricted accounts. Choices can be rather complex. At 70-1/2 years of age the government will take suspect life span and force to take an amount that will deplete the account to near zero if you live longer...

I bet you can figure the why's of risk on you and the government. It is a racket that ensures investment.
Turtle Crawler
Admin
Fri Feb 08 17:52:26
Your thoughts are correct. Move it all to the s&p 500 index fund. Those Target date funds have high fees and will under perform over the next 40-50 years until you withdraw that money.
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