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He has two points with which I agree: (a) many investing strategies which rely on frequent trading or high leverage are not available to retail investors becau

by waqf 15y ago

He has two points with which I agree: (a) many investing strategies which rely on frequent trading or high leverage are not available to retail investors because of commissions, spreads, or taxes; (b) (i) mutual funds etc. are poor investments because of the fees they charge; and (ii) because 401(k)s often force you into mutual funds, 401(k)s are often poor investments. Of those, I'm only angry about (b)(ii), because the government forces me (with tax incentives) to put money in my suboptimal 401(k). The rest is just a question of understanding what game you're playing and acting accordingly. I don't see why I should be offended that somebody else gets better access to the markets than I do, any more than I'm offended that my friend who works at the donut shop gets free donuts.

joshu 15y ago
don't most 401ks offer index funds?
- jerrya 15y ago
  Right, so the corollary seems to be: "Unless you are bignum rich, the best investment strategy is to put your money into a market index fund (Vanguard 500) and wait..."
- tedunangst 15y ago
  They also have the all cash option, which by itself offers a very good return if you factor in matching and tax benefits. And if you switch jobs somewhat frequently you can roll it over into a no fee IRA you manage without necessarily worrying about the state of the market when you do the rollover.
- fennecfoxen 15y ago
  My Fidelity 401(k) had an S&P 500 index fund. Expense ratio was something like 1.2%. Yes, you can get those for 0.06% as an ETF. Yes, the extra 1% is probably substantially yacht money.
jfruh 15y ago
Can someone smarter than me explain how exactly 401k fees are assessed? My wife's 401k has $3 taken out of it as a fee once a quarter; my 401k doesn't even have that. Or are the fees built into the returns? (e.g., my 401k is up 5% for the year, but without the fees it'd be up 6% or something like that?)

by waqf 15y ago

joshu 15y ago

don't most 401ks offer index funds?

jerrya 15y ago
Right, so the corollary seems to be: "Unless you are bignum rich, the best investment strategy is to put your money into a market index fund (Vanguard 500) and wait..."
tedunangst 15y ago
They also have the all cash option, which by itself offers a very good return if you factor in matching and tax benefits. And if you switch jobs somewhat frequently you can roll it over into a no fee IRA you manage without necessarily worrying about the state of the market when you do the rollover.
fennecfoxen 15y ago
My Fidelity 401(k) had an S&P 500 index fund. Expense ratio was something like 1.2%. Yes, you can get those for 0.06% as an ETF. Yes, the extra 1% is probably substantially yacht money.

jfruh 15y ago

Can someone smarter than me explain how exactly 401k fees are assessed? My wife's 401k has $3 taken out of it as a fee once a quarter; my 401k doesn't even have that. Or are the fees built into the returns? (e.g., my 401k is up 5% for the year, but without the fees it'd be up 6% or something like that?)