I have been maxing out my 401K, HSA, and backdoor Roth, and feeling pretty good about it, but have recently realized that even the "best" options in my 401K are just terrible. I have chosen funds with the lowest expense ratios, but they are still way too high in my opinion. I actually have a negative rate of return from last year. At what point do the terrible fund options break even with the tax consequences of either pulling my money out of no longer funding it?
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Oh, also, my employer only matches the first $1k.
Investment options are below, by class:
Short-Term Fixed Income
Morley Financial Services, Inc, Principal Stable Value Fund
Fixed Income
Mellon Capital Mgmt, Bond Market Index Separate
Principal Global Investors, Core Plus Bond Separate Account
Principal Real Estate Inv, U.S. Property Sep Acct
Balanced/Asset Allocation
Principal LifeTime Strategic Income Separate Account
Principal LifeTime timed accounts, through 2060
Large U.S. Equity Large U.S. Equity
Edge Asset Management, Inc.
Principal Global Investors, LargeCap S&P 500 Index Separate Account
Rowe Price/Brown Advisory, LargeCap Growth I Separate Account
Small/Mid U.S. Equity Small/Mid U.S. Equity
AB/CCI/Brown/Emerald, SmallCap Growth I Separate Account
Columbus Circle Investors, MidCap Growth Separate Account
Delaware Management Company, Delaware Small Cap Value A Fund
Goldman Sachs/LA Capital Mgmt, MidCap Value I Separate Account
Principal Global Investors, MidCap S&P 400 Index Separate Account
Principal Global Investors, SmallCap S&P 600 Index Separate Account
International Equity
Principal Global Investors, Diversified International Separate Account
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I actually have a negative rate of return from last year.
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Ummm... the market is down. A negative rate is expected.
Those are not that terrible.
Here:
Principal Global Investors, LargeCap S&P 500 Index Separate Account
Principal Global Investors, MidCap S&P 400 Index Separate Account
Principal Global Investors, SmallCap S&P 600 Index Separate Account
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Agree. Those expenses are well under 0.5%. You are far far better off investing in those than in the cheapest best funds in a taxable account.I sometimes have trouble reading private messages on the forum. I can also be contacted at [email protected]
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I actually have a negative rate of return from last year.
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Most investors in well-diversified portfolios were down last year. If you were down more than 2% or so, review your portfolio to see if you are too heavy in areas that were down even more.Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087
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Well, you are looking at your returns through the lens of a short-term perspective, not a good idea, imho. Your goal should be to achieve long-term returns that match the market. However, short term imbalances can give you clues about problem areas.
If you are viewing all of your individual accounts as one portfolio, then you should be diversifying across the universe of your accounts rather than duplicating the diversification within each account. In that case, some will be higher and some will be lower but the combined results should simulate the market. It sounds to me as if that is what you are doing. If the combined result is very far off, then I would presume you are imbalanced in one or more areas. Even if the combined returns of your portfolio is higher, I would be uncomfortable with that allocation for the long term.
Hope this makes sense. I'm afraid I haven't explained very elegantly.Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087
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I do try to look long term, but when I have less than I have put in in one account, it eventually catches my eye. It was actually down before the market correction.
Thanks, Johanna, you make an excellent point about how I am diversifiying. If I change how my accounts are balances then I can use only the "good" options within the 401k. You're correct that I have been diversifying within my accounts, and therefore need several good options in different categories. I initially set things up this way because it seemed simpler than adding my taxable, 401k, HSA, IRA, etc, but if I diversified as a whole I could not only utilized better fund options but improve my taxes. I guess I need to bite the bullet and get the spreadsheets out. No time like when the market is down, right?
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I guess I need to bite the bullet and get the spreadsheets out. No time like when the market is down, right?
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That's correct. The point is the diversification, not the timing. People shy away from selling when the market is down, but you'll be buying into bargains, too. And I always say, if you wouldn't buy it again tomorrow if you didn't own it, you need to get rid of it.
There are apps that will make this easier than spreadsheets, but if that's what you are comfortable with, use what works.Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087
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Any in particular you'd recommend?
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Any in particular you’d recommend?
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Recent review of top 5. The Excel link from swimirvine is pretty cool if you want to auto-update there. You need to have a Google account. Morningstar is decent, too.Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087
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Thanks so much!!
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Glad to help.Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087
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