The Rokslide Stock Traders Thread

[cowdisciple]

I have a 401 thru my employer at Edward Jones. Their returns sucks!!! The SPY beats the crap out of them. I have called in several times to try and get all my money put in the SPY. Same answer every time "our policy won't allow that as it's not diversified enough".

Something here doesn't make sense. 401k plans have a menu of investment options set by the plan sponsor (the employer). No one can tell you what to invest in as long as it's on the menu. If there is no S&P 500 index fund on the menu (which would be unusual) than that's the answer. Edward Jones can't set any kind of policy, and if that's what they're telling you, just log in and do it yourself.

Some very small employers get railroaded pretty hard by plan providers as far as the funds on the menu, so maybe there is no decent option. Every reasonably managed plan should have some kind of passive index option for each major index. I guess if you wanted to post the funds available in the plan you'd get good feedback. If all the options suck (which I have seen) then maybe you don't want to contribute more than needed to capture the ER match, but the tax deferral is still probably worth eating a 1% fee load if you have to.

 

[KsRancher]

Something here doesn't make sense. 401k plans have a menu of investment options set by the plan sponsor (the employer). No one can tell you what to invest in as long as it's on the menu. If there is no S&P 500 index fund on the menu (which would be unusual) than that's the answer. Edward Jones can't set any kind of policy, and if that's what they're telling you, just log in and do it yourself.

Some very small employers get railroaded pretty hard by plan providers as far as the funds on the menu, so maybe there is no decent option. Every reasonably managed plan should have some kind of passive index option for each major index. I guess if you wanted to post the funds available in the plan you'd get good feedback. If all the options suck (which I have seen) then maybe you don't want to contribute more than needed to capture the ER match, but the tax deferral is still probably worth eating a 1% fee load if you have to.

My employer (owner/boss) and 2 employees. I have money in a S&P 500 type fund in my account. But it's only 20% of my total. The rest is split up in other funds. International and some other BS that's only returning a couple percent. I have tried numerous times to move all my money into the 500 fund and they won't do it. They keep telling me it's against their policy.

 

[cowdisciple]

Here's another tidbit of info along employer 401ks : My employer had a $SPY like offering and the expense ratio was 3x what it would have been if I would have bought it directly. IIRC the ER was 0.15% vs. 0.05%. The few are always out to screw the many...act accordingly.

And another tidbit that helps addresses the above. If you are 59.5 years old, you can make an in-service withdrawal from your 401k, while still being employed, and deposit it into a Rollover IRA, which gives you almost unlimited investment options and doing it the cheapest way possible.


Eddie

Second this.

Always roll 401ks into IRAs as soon as possible. There's no downside. The upsides are that you get full control of your investment options, you escape a layer of fees, and you consolidate accounts into a single platform. (tons of people lose small balance 401k accounts. If you leave the employer and move, and they can't find you, and you forget about that $6,000 or whatever, it's going to just sit there forever)

 

[cowdisciple]

My employer (owner/boss) and 2 employees. I have money in a S&P 500 type fund in my account. But it's only 20% of my total. The rest is split up in other funds. International and some other BS that's only returning a couple percent. I have tried numerous times to move all my money into the 500 fund and they won't do it. They keep telling me it's against their policy.

They don't get to set your policy. The company should fire them and get a plan through Fidelity or Vanguard or someone reputable with decent investment options. If you can't make that happen, get your plan documents and read them, because I have quite a bit of experience in this area and this doesn't add up. The plan sponsor has a fiduciary duty to provide a menu of investment options for the Plan, and you can invest however you see fit within those options. Whether there's anyone at the employer capable of discharging that duty can be problematic for small organizations.

 

[Beendare]

Assuming you mean stocks vs bonds/cash…. With that long to go why not go 100% stocks? I have about 20 left and have been 100% stocks for the last 15 years. Couldn’t imagine the gains I would’ve missed out on had I allocated 30% of my portfolio to something “safe”.

Agreed. The bond allocation is there- supposedly- to mitigate market fluctuation- ie, Risk. Risk is always a factor…but like I said earlier- longer time frames lessen the risk.

Its true that sometimes bonds can help….but that hasn’t been the case for a few years now.

The risk is mitigated by your long 20+ year time frame…assuming you wouldn't freak out and sell on a 10-20% dip.

Bonds- Now its a whole different story if bonds are paying 7% plus…then yeah, own some bonds. If they are 9%, heck yes, gobble those up and own a higher % of bonds.

These are easy to make quarterly/ yearly adjustments to a portfolio…and in an IRA no tax consequences until you take it out.


In a two decade plus time frame like that…the Risk is actually that you would lose out on good returns by NOT being invested in the better parts of the market.

There is a risk of plopping it into Stock ETFs all at once…. like in 5Miles example, you get a big dip right afterward.

Thats where the DCA strategy helps mitigate that. Plug the money in over a 1-2 year time frame with the rest in 5% treasury backed money markets. ( at Schwab the symbol in SNSXX) Then if the market dips, your next buy is on the cheap.

 

[Beendare]

Second this.

Always roll 401ks into IRAs as soon as possible. There's no downside. The upsides are that you get full control of your investment options, you escape a layer of fees, and you consolidate accounts into a single platform. (tons of people lose small balance 401k accounts. If you leave the employer and move, and they can't find you, and you forget about that $6,000 or whatever, it's going to just sit there forever)

Great advice.

Plus those company managed plans have layers of fees and restrictions that just cost you money.

 

[Beendare]

My employer (owner/boss) and 2 employees. I have money in a S&P 500 type fund in my account. But it's only 20% of my total. The rest is split up in other funds. International and some other BS that's only returning a couple percent. I have tried numerous times to move all my money into the 500 fund and they won't do it. They keep telling me it's against their policy.

This is because they use the old school risk models….and they think they are doing you a favor helping spread your risk. There is something to it…but I look at it this way;

Why have money in horribly underperforming sectors for the sake of spreading out your Risk? That strategy is risky by itself.

Instead you can get ETFs that are massively spread out with no one holding making up more than 2-4% of the whole ETF. Sure some are concentrated- like some S&P etfs where stuff like Apple is 15% of the whole fund. Sometimes thats good- but not for Risk mitigation.

In your brokerage account, Every ETF will list the holdings- always check that along with the percentages. Concentrated usually outperforms…but it fluctuates more too ( riskier)
This is vanguard tech etf- VGT- concentrated

Fidelity and iShares have etfs that are almost identical to VGT.
Then there are more diversified ETFs- still tech, but more spread out- less risk like this QTEC




Point is- with a little bit of research, you can manage risk with stock etfs and a long term timeline

I will leave you with this; BND the highly rated vanguard intermediate bond fund chart for the last 5 years. (Factoring in dividends its a barely positive return)

 

[BBob]

Oil producers led by Saudis extended supply cuts amid slack prices

Saudi Arabia and allied oil producing countries have extended their deep output cuts aimed at supporting slack prices.

apnews.com

As expected OPEC+ extends cuts. Let’s see how demand goes. Uncle Joe doesn’t have much reserves left to to play with and help him save the day. Time doesn’t look to be on his side this go round. How’s it going to play out? Let’s go oil

 

[KsRancher]

They don't get to set your policy. The company should fire them and get a plan through Fidelity or Vanguard or someone reputable with decent investment options. If you can't make that happen, get your plan documents and read them, because I have quite a bit of experience in this area and this doesn't add up. The plan sponsor has a fiduciary duty to provide a menu of investment options for the Plan, and you can invest however you see fit within those options. Whether there's anyone at the employer capable of discharging that duty can be problematic for small organizations.

I just got off the phone with Edward Jones. I am in a "guided solutions simple IRA". And was told that it is NOT a recommendation but it's a policy that I have to be in 5 different things. Large cap, mid cap, small cap, international and aggressive. And there is a percentage of each that I need to have. They are sending me the percentage of each I need to have and what stocks they will let me buy for each category. My aggressive stock IEMG. I looked it up and WOW, it's a dog. It makes up 5% of total.

 

[Beendare]

I just got off the phone with Edward Jones. I am in a "guided solutions simple IRA". And was told that it is NOT a recommendation but it's a policy that I have to be in 5 different things. Large cap, mid cap, small cap, international and aggressive. And there is a percentage of each that I need to have. They are sending me the percentage of each I need to have and what stocks they will let me buy for each category. My aggressive stock IEMG. I looked it up and WOW, it's a dog. It makes up 5% of total.

( at the risk of ticking off the financial planners here)

I’ve heard that same complaint many times….its a Typical “ investment advisor portfolio”….like I said, just a bunch of salesmen then they plug you into a convenient (for them) model and collect their fees.

 

[go_deep]

I use a brokerage link in my 401k that goes through my investment guy, he's been able to get me about 11% in my 401k. Way better than all the other people bragging about their 5-8%.

 

[Ucsdryder]

I use a brokerage link in my 401k that goes through my investment guy, he's been able to get me about 11% in my 401k. Way better than all the other people bragging about their 5-8%.

Who’s bragging about 5%?

 

[go_deep]

Who’s bragging about 5%?

Most of the people I work with who only use the limited options available to is in our company match 401k. Having brokerage link inside my 401k has help raise that to a close return to my Roth that I have outside of my 401k. If my employer didn't do such a large contribution to it 401k, I wouldn't even bother with it.

They use the target my retirement age, set it, and forget it. The Ron Popeil method.

 

[KsRancher]

( at the risk of ticking off the financial planners here)

I’ve heard that same complaint many times….its a Typical “ investment advisor portfolio”….like I said, just a bunch of salesmen then they plug you into a convenient (for them) model and collect their fees.

Yep. Took me a while to figure out. But that is exactly what they do.

 

[go_deep]

I got a funny as heck story. My employer does a 4x match, you put in $1, they put in $4 up to 15% of your monthly check.

After one of our benefits meetings a couple years ago I'm working a job with this guy who's been employed there for probably around 6-7 years, he said, you put money into that retirement account they give us? I'm like, yes, do you? He said, no, do you think it's a good deal? Mind, blown.
This dude easily left 6 figures with interest accrued on the table up to that point.

That's the average investor, or maybe a little below average.

 

[DiabeticKripple]

I move my funds every 6 months within the portfolio I’m allowed too. I have got 22% in one year, 11% YTD, 8% over the last 3 years.

Everything really turned around last fall.

 

[CorbLand]

I got a funny ass heck story. My employer does a 4x match, you put in $1, they put in $4 up to 15% of your monthly check.

After one of our benefits meetings a couple years ago in working a job with this guy who's been working there for probably around 6-7 years, he said, you put money into that retirement account they give us? I'm like, yes, do you? He said, no, do you think it's a good deal? Mind, blown.
This dude easily left 6 figures with interest accrued on the table up to that point.

That's the average investor, or maybe a little below average.

This is why I always say, if someone has a retirement account, they are putting money in it and buying any of the funds (regardless of anything) they cant be that dumb.

I remember telling someone that I have money in the stock market and their response was good luck with those taxes. I was like, I shouldnt be using my money to make more money because I may have to pay some taxes? They responded with you will pay like 30% taxes on it. I responded with but I get to keep 70% and all I did was click some buttons...

 

[Marshfly]

This is why I always say, if someone has a retirement account, they are putting money in it and buying any of the funds (regardless of anything) they cant be that dumb.

I remember telling someone that I have money in the stock market and their response was good luck with those taxes. I was like, I shouldnt be using my money to make more money because I may have to pay some taxes? They responded with you will pay like 30% taxes on it. I responded with but I get to keep 70% and all I did was click some buttons...

Broke/scarcity mindset. It infects huge portions of the population and they have no idea.

 

[CorbLand]

Broke/scarcity mindset. It infects huge portions of the population and they have no idea.

I am a fairly risk adverse individual, at least by my standards and I am amazed at how many people I talk to that are amazed at the amount I have for my age. Makes me shake my head considering the fact that I feel so behind.

 

[Marshfly]

I am a fairly risk adverse individual, at least by my standards and I am amazed at how many people I talk to that are amazed at the amount I have for my age. Makes me shake my head considering the fact that I feel so behind.

People will get so scared of losing a little bit of money but should really be terrified of not having MORE THAN enough later on.