Post by badgergrl on Sept 13, 2016 15:07:26 GMT -5
My husband's company changed who is administering their 401k so they moved money and just arbitrarily chose funds. So I obviously need to research and reallocate the money.
I am thinking about moving it to a cash holding to give me a few weeks to do the research I need to do and also because I am getting really anxious about the election. I am afraid there is going to be a huge drop if trump is elected and since I need to move money any away maybe I can protect us ? Besides maybe missing out on 6 weeks of growth is there any downside to my plan?
Post by archiethedragon on Sept 13, 2016 15:18:07 GMT -5
I am not a fan of trying to time the market like that. My recommendation is to keep the money in the market, do the research and move it when you have made your choice.
I just moved my investments around so I can't really answer your questions without knowing more particulars but I will share my experience. In my account there are two things you can change: current investments and future investments. So while I did all this work researching which funds I wanted to choose I only actually changed my future investments, not my current. It was annoying after all that work. I have to figure out what to do in order to move the money in the old funds too now.
Also it took a few paychecks for the changes to take effect so I'd probably just do the research now and then make the switch. I don't know what funds your husband's employer chose but most mutual funds have managers that adjust for market projections and they aren't* going to tank without a warning.
Post by badgergrl on Sept 13, 2016 16:26:58 GMT -5
I have to choose all new funds because none of the old funds are in the new plan. So they arbitrarily chose new funds in similar percentages. Many of the chosen funds have huge fees so I have to sell all of our investments and reallocate because I cannot leave them in a new fund that is charging 3% fees when my old ones had .07% fees. It appears that the new bank specifically chose the funds with the highest fees. So I am not sure I should leave them while I figure out the new stuff anyway because of the crazy fees. It took me months to sit down and figure this out the first time so I am super annoyed I have to reinvent the wheel. My husbands 401k has no target funds so there isn't even a simple option.
I’d be really upset if they changed plans and now have all high-cost funds. The trend these days is to move to lower-cost plans. Can he complain to someone about it? Or at least ask what the reason was?
Also, how high of expense ratios are we talking here? Is there no cheap index fund option? I’ve seen some studies showing that investing in tax-efficient taxable mutual funds is better than investing in a 401k that has very high expense ratios (after claiming the free match money).
There are some Lower cost options but it's not the ones they chose for us if that makes sense. I'm not good at this stuff so I may not be explaining myself well.
So like he is 50% in large cap, 20% small cap 20% international. Within each of these categories there are like 10 choices some with high fees and some with normal fees. The bank in the transfer put him in all the high fee ones. So I have to reselect all of his funds anyway. so I just thought why not temporarily move it to a low risk option take my time figuring out where to put it and shelter myself from the potential disaster of November.
Why not temporarily move them to the lowest expense ratio option in each category? Then you'd probably be in decent shape if you got side-tracked and left them there for a while.