It’s getting towards the end of the year so I logged into my 401(k) account at Fidelity to see how it’s doing. It’s not good. My return for the year is real low. Like, I could make more in an ING account low. Will I ever be able to retire? What am I going to do?
Nothing.
That’s right. I’m not going to do anything. A couple of funds had bad years. So what? My 401(k) is meant for my retirement and I still have decades for it to grow. I’m not going to panic over one year. My plan is pretty diverse and it will recover. The funds that did bad - now I get to buy shares of those at a lower price. That’s dollar cost averaging.
Know what else? My company matches 4% on a 5% employee contribution (I contribute 5% for the full company match). That’s automatically an 80% return on my contribution! Oh, throw in the tax savings this year too! When you think of it like that it’s not too shabby. Any losses are with company money (that’s how I’m looking at it).
Could there be considerations that would make me concerned? Yes. If I was close to retirement I would want to make sure my funds aren’t too volatile. Maybe a little more cash and less stock for my funds. If my plan choices weren’t diverse I might also be concerned (I have a mix of small-, mid-, and large-cap funds as well as some international exposure). But as it stands I consider myself doing fine.
When you check your investment accounts make sure you’re not just looking at one performance number. Understand the bigger picture.
What do you think? Am I in trouble or am I doing the right thing not worrying? (Click here to see what I’m invested in).
Let me know!
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Ah - no, don’t worry about it at all. You’re doing the right things, getting in early, hitting the company match, and doing it regularly. Do you have a post showing what funds you’ve chosen? Thanks for the post back on my side.
Thanks for the comment Hank! Great idea on the funds, I think I’ll follow up with a listing of what I’m investing in. I’d love to hear your thoughts once I post it!
I think you’re fine. I started with a new employer in June, so my 401(k) return is in the negatives. Granted, -0.56% is negligible, but like you, I’d have done better in a savings account. That does not mean I should have stuck the money in a savings account. In the long run, we’re both better off with the 401(k).
@Honest Dollar - Thanks for the comment! Yes, it’s the long run that will win out for us in the end!
When it is going down and you are young, just think of it as a great buying opportunity. It will turn if you are in good funds.
Best Wishes,
Dividends4Life
@4Life - That’s the way I look at it. I have plenty of time and some funds have gotten cheaper to buy.
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