Personal Finance Tips: The 3 Things Your Financial Advisor Won’t Tell You About Your 401K

Personal Finance Tips: The 3 Things Your Financial Advisor Won’t Tell You About Your 401K

So, tell me the truth… Have you seen your 401k decline in value in the last year?

3-5 years?

For many years the 401k plan has been touted by the media and the institutions to be one of the best financial vehicles to place your money in.

For 97 percent of the population, the fixation on the account balance is real..

Calling a Fidelity or Vanguard every quarter and nervous because their account balance went down by 10 percent.

I’ve had many clients of mine over the 15 years in practice come to me with similar concerns:

1. My 401k is too volatile.

2. I don’t know if I should max out my contributions.

3. I don’t know how to take money out of my 401k when I need it.

4. I don’t if I should leave my money in my 401k after I left my employer.

If you work in Corporate America my friend, you may have similar concerns.

In today’s article, I want to share with you the 3 things your financial adviser WON’T tell you about your 401k and how to create a game plan to handle your retirement picture in a way where you are empowered to make clear financial decisions.

The 3 Things Your Financial Advisor Won’t Tell You About Your 401k

1. What You Are Paying For in Fees

This is massive!! HUGE!

Not knowing this can cost you a ton of lost opportunity in wealth creation over a long period of time.

401ks have fees for management of the investment portfolios and other administrative costs.

Employers and employees are typically aware of the fund expenses – also known as expense ratios – in their plan, but are often blind to the other fees that are also tacked on.

All in all, employees in small and mid-size company plans are often subjected to paying two to four percent in fees annually on their 401(k) account balances. There’s no need for this to exceed one percent for everything.

By staying below the one percent threshold, employees can accumulate tens if not hundreds of thousand dollars more savings over a thirty year time frame.

2. Actively Managed Funds Rarely Beat The Market – Constant Under -Performing Investments

Most 401(k) plans are built with actively managed mutual funds with a goal to beat a benchmark market index (e.g. the S&P 500).

Beating the market sounds like a worthy goal, but unfortunately, few fund managers can demonstrate results of doing this consistently over any stretch of time (if ever).

Picking stocks is like predicting the weather – very hard to do with any real consistency.

Your key is to never have over inflated expectations about any one fund and never attempt to time the market.

3. Max Out!!!? Or Not?

Most advisors will tell their clients to max their 401k contributions for a given year.

Here is what happens with that scenario:

1. You are ” locking up” excess cash flow in a plan that has governmental constraints on how the game is played.

2. There are no financial benefits by having “one use of your money”

3. You are subjecting your cash flow to restriction and unbalance in your portfolio to have just your 401k funding your retirement aspirations.

Only take the match. It is what the 401k was designed for – creating a tax deduction and the match an employer gives is important. Take the free money. Don’t be negligent and put more. Create a balanced approach.

My friend, if you are working in Corporate America, take these tips and strategies as purely education. Please seek the advice of your own council prior to any implementation or consideration of these strategies.

I hope that these tips have helped you with your clarity regarding your 401k.

Leave your comments below and let me know your thoughts.

Also, if you’d like to learn how I take my love of finance and turn that into blog content where I educate my readership and have the opportunity to create income from it, then click here now.

Looking forward to continuing to provide value to you, my valued reader.

Are you ready to look at 401k in a different light?

To Your Success,

Roger A. Silvera

“The Big Idea Catalyst”

P.S. To learn more about personal financial strategies and tips, tips on entrepreneurship and business ownership and mindset principles, go to my official blog by clicking here.