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JAque
11-23-2003, 03:43 PM
I have 4x 401K accounts, 2 from present employers (wife & I) and 2 from past employers. Due to the limited number of options to invest within a familiy (like Fidelity , only 10 different funds in my employer's portfolio). Is there an strategy for these 401K plans or just hope for the best? I try each year to move some money to the one that performed better and diversify the money in bonds/stocks Mutual funds but I don't think it makes much difference. Since I have invested for the last 18 years, I have a considerable amount of money but there was no investment plan behind it.

The only individual stocks that I have a choice to buy are GM & GMH.

Is it truly a roll of the dice for all these 401K accounts?

thanks in advance..


JAque

Ray Zee
11-23-2003, 07:23 PM
see if you can move into any other account where you can buy individual stocks. you might with the old accounts. if you are stuck with mutual fund account find a big diversified one with low expenses and go with it. you should track the overall stock market in the very long run, which is what you want to be doing in a 401.

Mark Heide
11-24-2003, 03:09 AM
JAque,

With 401K funds from previous employers you should have it managed by someone that will let you diversify your capital into any investment. If you have over 100K from previous employers you should have the option of investing in your choice of stocks and bonds. The problem with most mutual funds is the management fee charges can absorb your profits. Usually, the mutual funds with the lowest management fees are index funds. I suggest these as your investments if you do not have the time to manage your money. The majority of stock funds underperform the index funds which makes the index fund a good investment. In order to pick a stock fund that does better than the index fund (plus consider management fees added) you will have to do your own research on the fund. Most employers stock funds are publically traded. You can look at their performance by using several free sites like www.quicken.com (http://www.quicken.com) to compare them to the indexes.

With your current employer fund options you should be able to do some research to figure out which cost less to maintain and perform better.

Good Luck

Mark

GeorgeF
11-25-2003, 12:52 AM
The point to stategy is to minimize luck, unless you are especially shrewd you can only do this through diversification and expense reduction.
1) As to GM ,Hughes and stocks it is not a good idea to own more than 4% of any particular stock.
2) I do not suggest you invest in a mutual that charges more than 1% as expenses.
3) I suggest you stick to index funds like vanguard and TIAA-cref.
4) I suggest you include bond funds in your mix.
5) Assuming your salary is paid in US dollars you should consider some foreign bond funds just in case the president decides to get involved in foreign military adventures or run up deficits.
6) If you are involved in the auto business I suggest you lean twards investing outside the auto business so that just incase the US auto business does not work out you will have something to fall back on, while if the US auto business is successfull you have you job.
7) If you are infact shrewd and have the time to devote to it you can violate all these rules, but remember smarter people than you have failed to acheive investment success.

JAque
11-25-2003, 02:23 AM
Hi George:

Thanks for response but let me clarify some of your statements:

"The point to stategy is to minimize luck, unless you are especially shrewd you can only do this through diversification and expense reduction.
1) As to GM ,Hughes and stocks it is not a good idea to own more than 4% of any particular stock.

As part of the mutual fund portfolio, I have the option to buy those 2 stocks. However this only on one of the 401K plans. This plan have a number funds to invest as well. I own a little stock in GMH.

2) I do not suggest you invest in a mutual that charges more than 1% as expenses.

I don not believe I pay for any of the funds as this is part of the benefit


3) I suggest you stick to index funds like vanguard and TIAA-cref.

I have 4x 401K plans . Each plan offers a family of funds, I can only pick within the group of that particular family and plan. However, one of my 401K plans offers TIAA-cref.


4) I suggest you include bond funds in your mix.

I have between 25 to 30 % invested in bonds across all 4 401K plans.

5) Assuming your salary is paid in US dollars you should consider some foreign bond funds just in case the president decides to get involved in foreign military adventures or run up deficits.
I do not have any of this.. I will give it a thought..!! good idea


6) If you are involved in the auto business I suggest you lean twards investing outside the auto business so that just incase the US auto business does not work out you will have something to fall back on, while if the US auto business is successfull you have you job.

I am in the auto business but the 401K plans have families of funds like fidelity, TIAA-cref., Cigna, etc. The only Auto related stuff are those 2 stocks I mentioned before



7) If you are infact shrewd and have the time to devote to it you can violate all these rules, but remember smarter people than you have failed to acheive investment success.


This is my point that when you are fixed within a family of funds where you cannot buy individual stocks, there isn’t much opportunity for a strategy other than diversity within the family available in the plan.

My question is there a way to investigate this mutual funds families and predict which one will perform better ? For example, in one of my 401K plans I have the options for Fidelity funds only (may be 15 of them), how do I pick the right 2 or 3 funds??

thanks

JAque

GeorgeF
11-26-2003, 11:17 PM
"I don not believe I pay for any of the funds as this is part of the benefit"

You should look at the funds expense ratio. It is the yearly cost of the fund. If the ratio is higher than 1% you are most likely needlessly enriching your manager. One place to find this is: http://biz.yahoo.com/funds/ If you use the charting tool you can compare a number of funds past performance. What you will discover is that about 2/3 of actively managed funds fail to beat an index funds.

You might consider subscribing to www.bobbrinker.com (http://www.bobbrinker.com) ($200/yr). Brinker has been able to time the market using mutual funds with some success. Hulbert financial newsletter is a news letter that rates other newsletters, you can look there for ideas. If you have a good library near by they might subscribe to Hulbert or Brinker.

I personally have achieved better results than Brinker just sitting on my international bond funds, but who knows how long that will last?