The 3rd is with a huge bank which I don’t want to name here because I don’t want it to get bad press. I am sort of forced to own the stable val in this bank because my 401K has no better place for my money ! I’ve noticed that they are being sneaky about losses they apparently are suffering. The NAV keeps creeping up slightly, at a 4 % rate, to give the appearance to outsiders that all is well, but every now and then approximately once every 2 months, I get a transaction (by going online to the bank’s website and looking up my account) stating “earnings gain/loss -x.xx” the last one was “earnings gain/loss -$10.10″ The “earnings gain/loss” is always negative, never positive. Seems like they are taking my prinicipal out to cover losses. Oh yeah, my number of “units” gets decreased slightly with each of these “earning gain/loss” things.

So they are selling off a few of my “units” every so often to prop up the NAV. The NAV is not $1.00 by the way. It’s some number that keeps creeping up.

Even with the whittling away of my principal, I’m getting about a 3 % annual return, which is OK with me, but I do worry about a big “unanticipated” plunge in the future. I do not trust ANY place with my money these days. Too bad there just aren’t any good options in my 401K.

Does anyone have factual information on what event occured on 12/1/08 in this particuliar fund? I am upset that JPM could not provide more detailed information on the factors impacting the fund.

Do you have 6 months of salary in a liquid savings account?
If not, you have no business investing in a 401k.

It’s amazing how blindly people invest a percentage of their earnings every two weeks without having anything to fall back on in case of an emergency. So the 401k becomes their savings account with a 10% withdrawal penalty attached to it. Nice return on your money there.

After tax investing is not that stupid and it worked just fine for decades before 401k’s arrived.
401k’s are not magic bullets to save you from the IRS. They are especially worthless when you consider the fact that they replaced your pension.

Thanks for the link, Moody. That Ameri-Financial calculator / analyzer is fantastic, i finally got to see where all my finances stand. Has it been working for you?

You get “lover return” from your investments?

No fair! In a good year, Vanguard only gives me boring old dividends and capital gains!

If one looks even casually into trading they’d see that the buy and hold returns would have been tremendously improved by following simple, but major, trading indicators.

The outlook is terrible. In technical analysis this has happened once. Maybe. Right before the great depression. Where things seesawed up and down on their 3 year, 90% decline with false rallies the whole way down. This is a once in a lifetime event (hopefully)…

Do I think I’ll get in at the bottom? Absolutely not.

Will I miss out on the biggest part of a bull market? Quite likely.

Could the market go up 25% this year? Possibly.

Could the market decline an additional 40% next year? I find it more likely than a 25% rise.

I’ve been trading actively trading for years. I spend probably 20 hours a week on it and have for years. I understand most don’t want do that… But the first rule is risk management, capital protection. I cannot time much, but I can recognize obvious trends.

Buy and hold works for the huge majority of entries. But right now, I find it far to risky. I wouldn’t have done it 6 months ago, I wouldn’t do it now.

My advice, if you do enter now, to is pre-define your risk. Set a “crazy” point where you will pull the plug… So you don’t do the whole deer in the headlights thing.

As Don said, in the long run, dividend reinvestment with equities has always won. The question is whether you’re in for the long run. I’m under 30 and I’m snatching up equities as fast as I can.

Jonathan, unless I’m doing my math wrong, your chart shows an average year-year return of over 7.5%. That would almost beat historical stock returns, even in good markets, with theoretically zero risk. Sure it’s right? I look at the stable value fund in my 401(k) and it’s yielding 3.75%, exactly half that.

Eric, blow your own money, not your sister’s retirement. Since she’s only in her 20′s, having her money out of stocks for a year won’t hurt her. The worst case scenario is that she’ll have 4.55% more on 50% of her holdings that she can then diversify in a year or so.

@Johnny, don’t know if stocks are cheap, but they are definitely cheaper than they were!

That’s not a great record.

I think it was Stocks for the Long Run that noted that the reinvested dividends during the 1929 crash cause investment performance to ultimately perform better over the long run than if that significant dip had not occurred. It’s the same kind of principle at work there. If you’re going to end up at the same place anyway, fluctuation along the way boosts your return.

The risk outweighs the reward. Potential declines outweigh potential rewards… I switched entirely over the stable in Feb 08. Stocks can and have declined 90% in a few years, the have never done that on the upside. Patience people, wait for a true bottom. There a serious underlying problems that need to be fixed and this is just the beginning (and we’re already address the symptoms not the causes).

Now time for me to be slammed with about 2 dozen “stocks are cheap!” posts…

A lot of my coworkers have lost 20,30,40% of their 401k money where I’ve only lost less than 10% because 60% of my money is in a stable value fund. When the market starts to act like it’s recovering, I’ll reshuffle, but doesn’t it seem stupid to lose money when you don’t have to? I may not catch the absolute bottom when it starts to recover (and maybe it already has started to do that), but I’m OK with that, knowing I haven’t lost a gazillion dollars waiting for that moment.

One coworker put his entire 401k into the stable value fund early this year and hasn’t put it back in. He has actually made money this year! How many people can say that?

@MBirchmeier
If someone was drawing from their bond funds, I’m assuming that they’re retired and in that case, the 401k should be rolled over to a mutual fund company IMO. Then they wouldn’t have to deal with it and would have a lot better choices of funds.

This just seems like a fee to smooth out volatility. While volatility is uncertain, the insurance fee is a guaranteed drag on returns.

If you were drawing from your bond funds rather than building them up I think the cost might be worth the stability, but while earning this seems like paying for peace of mind you’ll never notice.

-MBirchmeier