Comments on: Does your 401k Plan Offer the Elusive Self-Directed Brokerage Option? http://20somethingfinance.com/self-directed-brokerage-401k/ Personal Finance Blog for Young Professionals Thu, 24 May 2012 00:59:02 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: AHB http://20somethingfinance.com/self-directed-brokerage-401k/comment-page-1/#comment-4593 AHB Fri, 18 Sep 2009 08:03:49 +0000 http://20somethingfinance.com/?p=632#comment-4593 My company offers the self-directed 401(k) option and allows me to invest in individual stocks and mutual funds. It's great. My company offers the self-directed 401(k) option and allows me to invest in individual stocks and mutual funds. It’s great.

]]> By: Scott Deegan http://20somethingfinance.com/self-directed-brokerage-401k/comment-page-1/#comment-3192 Scott Deegan Fri, 13 Mar 2009 15:23:06 +0000 http://20somethingfinance.com/?p=632#comment-3192 Felix...your employer is by law required to offer some type of money fund as a choice. Felix…your employer is by law required to offer some type of money fund as a choice.

]]> By: Felix http://20somethingfinance.com/self-directed-brokerage-401k/comment-page-1/#comment-3169 Felix Wed, 11 Mar 2009 20:46:42 +0000 http://20somethingfinance.com/?p=632#comment-3169 is your employer liable if thiere is no money market accounts to put your money in untill times get better. is your employer liable if thiere is no money market accounts to put your money in untill times get better.

]]> By: Scott http://20somethingfinance.com/self-directed-brokerage-401k/comment-page-1/#comment-1731 Scott Sun, 21 Dec 2008 18:24:11 +0000 http://20somethingfinance.com/?p=632#comment-1731 Most companies do not offer self directed because of the liability and secondly the expense. That being said, a 401k with 100 mutual fund choices is no more effective than one with only 15 to 20 funds. Mutual funds have a history of being redundant, meaning that you may be investing in the same companies although you are in several different funds. A true self directed retirement plan is one that allows all choices of investment, not just a ton of mutual fund picks that allows you to "switch" all the time. And yes, the cost of moving your funds around will destroy your account balance from the fees alone, not to mention the fact that switching your investments constantly from one investment choice to another will probably result in you "chasing" after returns. Or trying to "get in" when its to late only to realize losses. Bottom line is that self directed retirement plans are perfect for being able to truly diversify into other asset classes not normally available in traditional plans. But one should still remember, that once diversified, one should not fall prey to "chasing returns. Rebalancing should be done bi-annually. If the self directed option is not available you can start your own Roth or Traditional IRA and accomplish the same goal. Using ETF's as a starting point. Most companies do not offer self directed because of the liability and secondly the expense. That being said, a 401k with 100 mutual fund choices is no more effective than one with only 15 to 20 funds. Mutual funds have a history of being redundant, meaning that you may be investing in the same companies although you are in several different funds. A true self directed retirement plan is one that allows all choices of investment, not just a ton of mutual fund picks that allows you to “switch” all the time. And yes, the cost of moving your funds around will destroy your account balance from the fees alone, not to mention the fact that switching your investments constantly from one investment choice to another will probably result in you “chasing” after returns. Or trying to “get in” when its to late only to realize losses. Bottom line is that self directed retirement plans are perfect for being able to truly diversify into other asset classes not normally available in traditional plans. But one should still remember, that once diversified, one should not fall prey to “chasing returns. Rebalancing should be done bi-annually. If the self directed option is not available you can start your own Roth or Traditional IRA and accomplish the same goal. Using ETF’s as a starting point.

]]> By: Broke MBA http://20somethingfinance.com/self-directed-brokerage-401k/comment-page-1/#comment-1686 Broke MBA Thu, 18 Dec 2008 01:38:44 +0000 http://20somethingfinance.com/?p=632#comment-1686 My company does not. I work for a segment of a for profit company that will be spun off into a small non-profit. It looks like my 401(k) will be replaced with a Simple IRA. Not sure what choices I'll be presented with, but I'm sure they will be limited. My company does not. I work for a segment of a for profit company that will be spun off into a small non-profit. It looks like my 401(k) will be replaced with a Simple IRA. Not sure what choices I’ll be presented with, but I’m sure they will be limited.

]]> By: Ethel http://20somethingfinance.com/self-directed-brokerage-401k/comment-page-1/#comment-1679 Ethel Wed, 17 Dec 2008 22:46:47 +0000 http://20somethingfinance.com/?p=632#comment-1679 My employer has one, and I don't use it (but knew about it - it was publicized via email when it was added). I've considered switching so that I could get a standard S&P 500 index fund, but haven't had the energy to check thoroughly to make sure there isn't one already in the options available to me (if it's there, I didn't see it at first glance). My employer has one, and I don’t use it (but knew about it – it was publicized via email when it was added). I’ve considered switching so that I could get a standard S&P 500 index fund, but haven’t had the energy to check thoroughly to make sure there isn’t one already in the options available to me (if it’s there, I didn’t see it at first glance).

]]> By: Jeremy http://20somethingfinance.com/self-directed-brokerage-401k/comment-page-1/#comment-1668 Jeremy Wed, 17 Dec 2008 14:53:13 +0000 http://20somethingfinance.com/?p=632#comment-1668 Ours does, but I don't use it. Our fund lineup in the 401k itself is already pretty good, and even includes an institutional variant of the vanguard S&P500 index fund at a very low 0.05% expense ratio. So, given that and the rest of our institutional fund lineup, I'd be hard pressed to find cheaper funds unless I was really looking for some sort of specialty investments. But this post brings up a good topic, and people might be surprised at the features of their accounts if they take the time to look. Most employers aren't active in promoting the various products and services in their account, so you might be pleasantly surprised. Ours does, but I don’t use it. Our fund lineup in the 401k itself is already pretty good, and even includes an institutional variant of the vanguard S&P500 index fund at a very low 0.05% expense ratio. So, given that and the rest of our institutional fund lineup, I’d be hard pressed to find cheaper funds unless I was really looking for some sort of specialty investments.

But this post brings up a good topic, and people might be surprised at the features of their accounts if they take the time to look. Most employers aren’t active in promoting the various products and services in their account, so you might be pleasantly surprised.

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