401k

[a_real_hermit]

I was thinking about moving around some of the money I have in my 401k account. Right now I'm 100% in equities. I believe the market may be set for a correction, so I'd like to move some of the money into a safe spot so I can re-invested it after the price decrease. Of course, it's a bit of a risk, because the market could continue to climb upward

Comments

[sara_k_s]

Well, I've read that a good, safe, easy investment strategy is to put half in a stock index fund and half in a bond index fund, and rebalance annually. I currently have a mix of different types of funds in my 401(k), but I'm thinking about putting everything in one of the target retirement date funds (which weren't available when I started my job). Usually, the drawback to those things is that they have high fees, but for some reason, the ones in my 401(k) have really low fees.

[a_real_hermit]

The target date funds are good if the fees are low. Just make sure you keep an eye on the fees. When my company first offered the target date funds, the fees were "waived", according to the prospectus. Currently the fees are 0.80+%, and no notice was sent regarding the increase.

0.80% isn't bad, but you've got to remember that the target date funds hold other Fidelity funds, which in turn have fees associated with them. So you're paying fees on top of fees, which is really a drain.

No wonder Fidelity pushes the target date funds.

[a_real_hermit]

Now that I think about it, I suppose it's possible the target date fee includes the fee imposed by all the other funds. There's no way to tell, really. I think it would be difficult for them to make that calculation.

[sara_k_s]

That's pretty sneaky how they increased the fees without notice. My 401(k) is with ING, and the target retirement date funds have fees of 0.15% (there is a statement in the prospectus that the fees may be increased by a maximum of 0.02% per year). The S&P500 index fund has fees of 0.18%! It makes me wonder if there is a catch, but it seems like it would be much smarter to put my money in one of these target funds than to pay more fees to pick my own investments.