Monday, March 10, 2008

Doing a 401(k)?! In This Market?

Going from studio to studio these days, I hear people wonder aloud where they should put their 401(k) money.

I have a cluster of really simple answers:

1) Diversify (bonds; foreign and domestic stocks.)

2) Dollar cost average (just keep putting a chunk of money into the market each week, and don't obsess about the ups and downs ... downs ... downs.)

3) Pray that the market is cheap until four years before you're ready to retire, then pray that it shoots up into the stratosphere (the way it did from 1982 through 2000).

The man up above, currently the world's richest, has some observations about commodities -- oil in particular -- and is on record as saying that the American economy will come back strong sooner or later. He's high on Bill Gross (the bond guru of PIMCO, one of our 401(k)'s current options). Also on his partner Charlie Munger. (Not all of this is revealed in the video clip.)

As for the Animation Guild's 401(k) Plan, today the plan Trustees spent a few hours reviewing different administrators who might be running it in the relatively near future. (We do this every three years). We are currently being administered by Mass Mutual, an insurance company. We are looking at New York Life -- another insurance company and Vanguard (the nation's second largest mutual fund family) as possible replacement administrators. (We could very well remain with Mass Mutual, who knows?)

If you have any thoughts on these three administrators and think one might be better than the others, and if you're a plan participant, feel free to comment below, or drop us an e-mail. Oh yeah. Please use your actual name for this, because anonymous won't cut it.

The trustees are going to be chewing different options around for awhile, so there won't be any immediate changes to the Plan, just so you know.


Anonymous said...

Today, the Dow went up over 400 points, so anyone who's out of the market because of recent downturns lost out on the biggest rally in five years.

Ya gotta be in it to win it...

Steve Hulett said...

A close friend of mine has a PhD in Economics from Cornell. Thirty years ago he told me:

"Economics is an art, not a science. No economist can predict what 300 million people will do with their money on any given day. They only make educated guesses."

The name of the game is Asset Allocation.

Steve Hulett said...
This comment has been removed by the author.
Jason MacLeod said...

Hi Steve,

My vote would be for Vanguard - they seem to have rock-bottom management fees compared with most other funds. Also, they seem to have really embraced the concept of ETF's - not that I want to advide anyone on how to invest their money, but for me ETF's seem like a nice bridge between stock picking and just buying SPDR or QQQQ. I'm not familiar with New York Life, I'll check their site out. Can you comment on how much it costs us to change plan advisors? Are the management costs with either Vanguard or New York Life comparable to what we're currently paying Mass Mutual?


Jason MacLeod

Anonymous said...


Since I do not invest with Animation 401(k), I do not know how Mass Mutual Funds performance now. But I do have knowledge about mutual funds and life insurance companies.

Vanguard Funds have their own family of funds. When you have Vanguard Funds manage the 401(k), your selection is Vanguard family of funds. You have no access to AIM, Fidelity, etc...

As for New York Life, it is an INSURANCE company. As an insurance company, they allow to invite many mutual funds company such as Fidelity, Vanguard, Franklin Templeton, etc... to be under their umbrella. Therefore, you as an investor have more options to choose from. BUT it also comes with a price. Mgmt Fee and Expense ratio is much higher.

Usually, there is a Broker involve besides the administrator who managed our 401(k).

My recommendation is to have Steve present us both companies. Performance, expense ratio, management fee, maintenance fee, BROKER's fee, etc.. We will review which company performance the best with least expenses.

Personally, I would like to have animation 401(k) administer by the same group of advisors who managed our Union Pension.

Site Meter