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Thread: Recommend me some 401k investments...

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  1. #1 Default Recommend me some 401k investments... 
    After some discussions with a friend last night, I feel like I need to be a little more aggressive with my 401k and its investments. Currently I have it split between two Fidelity Freedom funds, but over the 7 years I've been investing in it, the gains have only been a total of about 14%.

    What kind of things do you guys recommend I look into? I don't mind being aggressive and taking some more risk... My 401k took a 35% dive in 2009 in a fairly safe investment, so I'm used to getting fucked lol...

    I feel like I should know A LOT more about the market than I do, especially with my father being who he is... But since I don't speak to him, he can't be much help.
    Quote Originally Posted by cegan09 View Post
    brass isn't good enough for those guys. Too heavy. They have burnt titanium because they are that awesome.
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  2. #2 Default  
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    1. Who is your provider?
    1a. Are you receiving any kind of match on your contributions?

    2. Can you pay them a nominal fee to have them manage it for you?

    3. How many funds do you have available to you?
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  3. #3 Default  
    If you seek returns and don't care about risk, follow bubbles.
    If you seek stability at the risk of lower returns (smarter, in the long run), then diversity across return drivers.

    That is not the same as diversification across markets, sectors, countries, or really anything - it is what it is - if something derives its return from X, don't invest in something else that also does.
    Otherwise, then you have correlation - and even things that have relatively low correlation when times are good, everything like that goes towards full correlation during crashes.
    So you want something fully non correlated.

    The bigger issue then comes down to what your selection universe allows.
    Traditionally, 401ks are limited to a small pool of options (and usually higher fees).

    But the answer is rarely "oh, just do this - you are welcome" - it involves a lot of setup and adjustment for optimal returns (usually meaning avoiding drawdowns).

    If you just set and forget, then just do indexes, and you get crushed on the crashes - but oh well, at least you don't pay fees (usually).
    Just the right amount of way too much.

    Don't make me assume my ultimate form.
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  4. #4 Default  
    Quote Originally Posted by bigpoppa822 View Post
    1. Who is your provider?
    1a. Are you receiving any kind of match on your contributions?

    2. Can you pay them a nominal fee to have them manage it for you?

    3. How many funds do you have available to you?
    1. Fidelity.
    1a. LOL. Yeah right. Another reason I'm looking for another job.

    2. I did notice this morning that I could, and it seemed to be $2-$5 a month to manage it, but the way they scaled the fees was rather confusing...

    3. I am not sure..

    EDIT: I just checked and I have 42 available investments.
    Last edited by nperkins; 01-27-2014 at 12:39 PM.
    Quote Originally Posted by cegan09 View Post
    brass isn't good enough for those guys. Too heavy. They have burnt titanium because they are that awesome.
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  5. #5 Default  
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    IMO, and I am by no means an investment guru or anything, when you don't get a company match on your contributions you may want a Roth IRA as there are far fewer fees and you will have a larger choice of funds.

    A lot of 401k managers take by a percentage rather than a flat fee. For example I pay 0.8% to have my 401k actively managed by Wilshire. I've only had them for a year so can't really comment on how good or bad they are yet, but I did have a very decent return for 2013.

    The set it and forget it method is to just invest in target date funds which have the appropriate amount of risk and will adjust their portfolio over time.
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  6. #6 Default  
    If I were going to populate my IRA more correctly (I currently just use it to trade stupid stuff via options, so it swings around in a way that one shouldn't really do with a retirement vehicle - but I have a 401k for that, so the IRA is just a toy to me without immediate tax implications):
    VIG
    VBR
    DNP
    JNK
    DBC
    and maybe ESS

    and maybe an equal pool of just cash (more relevant with more frequent reallocations)

    Allocate evenly across, contribute regularly, and reallocate every... some period (matters how much is in there vs cost to make the trade - as your cost is a lower %, can reallocate more often with less impact - if external to a retirement vehicle, then anything more frequent than yearly takes on a tax hit so large that it likely negates any reason to reallocate).

    Contributions are sort of helping reallocation anyway - so you could allocate those to correct the differences.

    Reallocation theory comes from Claude Shannon's paper back in like the 50s. One could argue against it on the divided generating ones assuming you are reinvesting the dividends - but it is more to account for bubble growth/collapses over time in this case.


    The big concept being that if you have $1000 and lose 35% (as you noted), then you are at $650.
    You then need to make back ~54% just to break even, which could take years - you are far better off to minimize losses than you are to chase gains.
    The gains you get then are dividends off of the flattened (growth) returns curve, compounded.
    Just the right amount of way too much.

    Don't make me assume my ultimate form.
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  7. #7 Default  
    Quote Originally Posted by omgomg View Post
    The big concept being that if you have $1000 and lose 35% (as you noted), then you are at $650.
    You then need to make back ~54% just to break even, which could take years - you are far better off to minimize losses than you are to chase gains.
    The gains you get then are dividends off of the flattened (growth) returns curve, compounded.
    This is my main goal... In 2009 I took a hard hit, and it took almost 3 years just to reclaim it. Granted I NEVER look at my 401k because I'm afraid i'll play with it too much, but I feel I need to do something.
    Quote Originally Posted by cegan09 View Post
    brass isn't good enough for those guys. Too heavy. They have burnt titanium because they are that awesome.
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  8. #8 Default Recommend me some 401k investments... 
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    Most 401k fund choices suck. Aim for lowest fees possible in your funds. Just pick a simple market tracker and maximize any lucrative company match like 100% match on the first 3% of salary invested
    Last edited by KPewPew; 01-28-2014 at 07:27 PM.
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  9. #9 Default  
    Quote Originally Posted by KPewPew View Post
    Most 401k fund choices suck. Aim for lowest fees possible in your funds. Just pick a simple market tracker and maximize and lucrative company match like 100% match on the first 3% of salary invested
    My company doesn't offer any matching.

    Should I just start up the managed account and say high risk is fine?
    Quote Originally Posted by cegan09 View Post
    brass isn't good enough for those guys. Too heavy. They have burnt titanium because they are that awesome.
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  10. #10 Default  
    That’s a huge amount and anybody would be affected by it. I am also planning to invest somewhere but before that can anybody tell me about what is equity? I seriously need all information before I put my money anywhere. Does it have to do anything with risk profiling as well?
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