Making money in 401k

[offroad]

So everyone thinks they can just put money into their 401k or other retirement and forget about it.

WRONG!!! That is what Wall Street and big banks want you to do. You take all the risk.

Why not watch the markets and trade once a week or two times. Taking risks makes you double the interest rate that a 401k makes.

So who is doing this? I am.

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Last year made 22%. This year might make 14%.

 

[caseyc]

Unless you have a "self directed" 401k account, you cannot trade in it. By "trading", that usually means to buy or sell individual stocks, etc. Most or all employer sponsored 401k retirement accounts usually only have certain mutual funds that you can buy, and that's about all. With that same company sponsored 401k account, you can't for example call your company/broker to say buy 1,000 shares of Facebook this morning, and short 5,000 shares of Cisco. However, if you were to leave/quit your job, you could then do a "rollover" of your 401k account to say Fidelity Investments (or ETrade, Ameritrade, etc), which could then be a full trading account that would allow you to buy and sell at your own discretion. Yes, I do agree that with some insightful planning, you might get better returns on your own, versus the returns based on your company's mutual fund selections which are generally conservative by design.

 

[Zil]

You should tell your potential investors about fees. especially trading fees on each transaction. Risk also produces losses. Unless you want to spend all your time studying the Market, put your hard won savings in a indexed fund such as Fidelity S&P 500.

 

[offroad]

If you have your funds in vanguard you can trade out. You just can't go back into the same fund again. But lucky you. That there are other similar funds you can put the money into at vanguard to simulate trading. It's enough to double interest rates. Maybe.

 

[caseyc]

You are referring to the 30 day wash rule, by the way.

It's better to find the "right" fund that will do well in the next 12 to 18 months and regularly buy more shares of it via "dollar cost averaging", versus buying and selling, selling and buying, the same fund (generally speaking).

One might also consider "ETF" funds too.
http://en.wikipedia.org/wiki/Exchange-traded_fund

As for researching a particular mutual fund, if that is your thing, Morning Star is considered pretty much the authority. Here's a link.
http://www.morningstar.com/

 

[offroad]

Yes was thinking ETF. Can you put all your 401k into an ETF?

 

[caseyc]

Nobody can answer that question except by you calling your employer sponsored 401k plan to find out if that's possible or not. Assuming you are referring to a company sponsored retirement plan, they are usually quite restrictive about what you can or cannot do.

Disclaimer: I in fact have a Series 7 stockbrokers license for many years. But I am in NO way trying to offer any investment advice whatsoever, nor am I trying to sell anything. We're all simply exchanging friendly ideas on a chat board. Because I've been doing this sort of thing for quite some time, I am more knowledgeable than the average Joe on the street about such matters.

 

[offroad]

Caseyc. - that's funny as hell. Suppose brokers need disclaimers all the time. Given lawsuit happy culture.

 

[caseyc]

Yes, sad, but true. There are plenty of d#mb@$$e$ out there that will say they lost money on account of so and so's purported advice, and want to sue someone. It's doubly true that disclaimers are used habitually for such reasons. That's the reason why even though I might have an answer or good idea about something, I just stay silent, cuz it's simply not worth it. There's no gain for me whatsoever, but there's only potential liability. A lose-lose scenario. Again, the same disclaimer: I'M NOT GIVING ANY FINANCIAL ADVICE HERE! Haha!

 

[akrvbob]

I have several vandweller friends in their mid-50s who were proffessionals (one was IT the other was an engineer) all their lives, but lost their jobs in the 2008 crunch. Could NOT find another job! (Why hire them when you can hire a 30 year old with experience and more current education?

All they could get was minimum wage jobs so instead they planned thier savings to last long enough to draw SS and moved into vans and took a small monthly draw on their savings.

One of them had enough to play the market and did mostly good. He invested conservatively in stocks with a bright future and that were also paying a good dividend so if he had to buy and hold he still got some money. For couple years he did good. But it took a LOT of time and it was worrisome and the market keeps having these mini-crashes so he just gave up and quit.

It can be done but it's not easy and it's not magic and it's not risk free. For most people it's a bad idea.
Bob

 

[westriver]

The most commonly cited statistic that I have encountered, regarding stock picking success, is that in any given year, 20% of those so engaged will "beat" the market average. When searching for those than can do so, consistently, on a five year horizon, the success rate drops to nearly zero. Most of the claims in the first post are questionable, when viewed as "advice" for other investors and retirement account holders. A typical investor who fully self directs their retirement funds, and does so using a frequent trading, has a statistically insignificant chance of beating a well balanced, "all in" stock fund, such as Fidelity's FTSMX ( 1yr 20.55%) or Vanguard's VTSMX (1yr 22.54%) over the long run. Hopefully you will have much success in your investing, while fully accounting for all the expenses and time involved in doing so, and be an outlier who consistently beats the market. Chances are that's unlikely to happen. Using a handful of well regarded index funds that have extremely low costs, my experience was that last year my returns were in the 22-26% range for my equity holdings.

 

[offroad]

Everyone did good last year. In the 20% or better. This year has been tough. Am trying to get to 15% I hope.

 

[offroad]

Westriver - thanks for the comment. Am finding you maybe correct in your assessment.

 

[Zil]

I agree with west river, indexed funds or balanced funds with a reliable firm, I use Fidelity, will win out in the end.

 

[caseyc]

Fidelity is probably one of the best firms out there.

 

[Zil]

There are others. But notice that many only hold your funds and they invest with Fidelity and other such funds.

 

[offroad]

Which fidelity fund though ?

 

[caseyc]

Which? Can't answer that. That's the $64,000 question. If answered, that could be construed as advice. I don't give investment advice. Ever. Nothing to gain...only grief. When I mentioned Fidelity earlier, I was simply commenting that it's a well run company. They offer all types of funds and they are a full service firm.

 

[Lucky mike]

I also use Fidelity......They treat me and my money a whole lot better than the bank and a few other firms did!

 

[offroad]

Caseyc - ignore the investment advice behind the curtain. Lol.