Dont Want my Old 401k in Stocks Anymore, Rollover?

[Ron Van D]

The Disappearance Of Peer-To-Peer Lending - Forbes

 

[Cash]

Then you are in some horrible funds that have not even come close to keeping up with the market in general. Do you know what funds you are in?

P2P lending carries a MUCH higher risk than the market statistically speaking... and for many other reasons.

3% is actually not that low. Most of these 401ks underperform the market substantially. Most investors underperform the markets substantially.

I would never get into p2p lending due to religious reasons among several others but talking about risk statistically is a bit off the mark.

Invest in what you know and understand and spread it around a little. Now is probably a good time to take some money off the table in stocks AND bonds and put the risk on the insurer.

 

[scagnt83]

3% is actually not that low. Most of these 401ks underperform the market substantially. Most investors underperform the markets substantially.

If they are in equity funds then 3% is very low.

The problem with 401k Rate of Return statistics is that around 40% of participants do not choose an allocation for their funds.

That means they are defaulted into "Default Account". For many years the vast majority of 401k plans used a Fixed Account or Money Market Account as the Default Account.... which obviously means they are earning between 1%-3% max.


Currently, the average 5 year return for a Large Cap Blend fund is around 13%.
Lets assume worst case scenario and say they are paying 3% total expenses.
That still puts them at 10% over the past 5 years.

So yes, 3% is very low if they are actually invested in equity funds.

The whole Default Account issue is the reason I asked what he is invested in. Many people do not even realize they are in a fixed account in their 401k.

The good news for 401k plans is that many are now switching to age based Target Date Funds or age based Actively Managed Funds for the default. So over the next 10 years the "average" 401k return should start to mirror market returns much more closely.

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Invest in what you know and understand and spread it around a little. Now is probably a good time to take some money off the table in stocks AND bonds and put the risk on the insurer.

I totally agree. Over the past 2 months I have been slowly taking gains on my equities and moving them over to cash and treasury funds. I think that come October & November there will be some nice buying opportunities and I plan to be in a strong position to buy.