Monday, October 06, 2014

401(k) Retirement Investing

TAG's 401(k) Plan has been transitioned from Mass Mutual for sixty-five days now, and there's been some changes.

A majority of participants were invested in bond funds and actively-managed stock funds prior to the move; now 93.5% of participants are in Vanguard Target Date Funds. All the Target Date funds (and we have twelve) have broad diversification with the following funds:

Vanguard Total Stock Fund
Vanguard Total International Fund
Vanguard Total Bond Fund
Vanguard Total International Bond Fund

(The shorter term target date funds add Vanguard's Short-Term TIPS Fund.) ...

It seems counter-intuitive, but the simplicity of a Vanguard Target date fund is the central pillar of its strength. Participants are broadly diversified, and they can "set and forget" their investment and know their asset allocation is doing better than 85% of all investors in the known universe.

Here's another reason to set and forget:

... Fidelity [Mutual Funds] had studied which customer investing accounts performed the best: They were the ones held by people who had forgotten they even had Fidelity accounts, and so did no buying or selling from them. ...

Need more motivation about keeping investing simple? How about this:

... [Warren] Buffett describes advice he has left in his will as to how the trustee should invest money Buffett is leaving for his wife. Here’s Buffett’s advice:

“My advice to the trustee could not be more simple: Put 10 percent of the cash in short-term government bonds and 90 percent in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.)” ...

I've made almost every mistake known to human-kind while saving for retirement, and after endless blunderinging around, my rules of thumb are (by now) pretty cut and dried:

1) Invest in Index Funds; avoid individual stocks (unless someone is gifting them to you.)
2) KISS: Keep it simple, stupid. Balanced Funds or a three-fund portfolio (Total Stock Market, Total International, Total Bond) are good things because they out-perform almost any other style of investing. So wallow in "the majesty of simplicity", you'll be richer for it.
3) Stick with your saving/investing program. Don't freak during dips (plunges?) in the market. Don't bail out at the bottom of a market and get in at the top. You'll have way less money.

Lastly. I am holding enrollment meetings for TAG members at different studios over the next several weeks. Here are the nearest dates:

Animation Guild 401(k) Plan Enrollment Meetings

Wednesday, October 8th -- Disney Feature Animation (Hat Building) -- Conference Room 1300 -- 3-4 p.m.

Monday, October 13th -- 6 point 2 Animation (Glendale) -- 6th floor -- 3-4 p.m.

Wednesday, October 15th -- Fox Animation -- Main Conference Room -- 2-3 p.m.

Thursday, November 6th -- DreamWorks Animation -- Dining Rooms B & C -- 2-3 p.m.


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