I think its increadibly dangerous with enough companies turning
around on a short notice like Enron and USWest (the trial of
Nacchio wrapping up a few miles where I am typing this).
I just dont have that much sympathy for the whining retirees
who were in 100% and lost everything. The risk is well known
and people are greedy.

On Apr 9, 2:01 am, "JD" <j...[at]zat.bzz> wrote:
- quote -

I'm fairly certain that your company has more information about the
other funds. Maybe you can't get it from the website, but they almost
certainly have some annual report about the fund performance and
holdings. Did you try asking HR if such info exists?

On Apr 8, 1:51 pm, "JD" <j...[at]zat.bzz> wrote:
- quote -

As others have pointed out, Enron probably averaged a 15% pa return
for about 20 years. Ditto Worldcom.

Unfortunately the subsequent year was 'zero'.

Watch the movie 'the Smartest Guys in the Room' where the lineman
tells his story. He had worked for a company taken over by Enron for
30 years, put all of his savings into company stock (a dull Oregon
utility) and had it entirely wiped out.

If I worked for GE (one of the world's largest and most diversified
companies, whose stock has nevertheless halved from its peak) I
wouldn't be so worried.

But if you think about the 'household names' that are gone, or dying
(US Steel, PanAm, Delta, General Motors all come to mind), you can see
that even the safest of companies can go south due to changed market
conditions or unforeseen circumstances, or bad or crooked management.

In the long run, I wouldn't hold more than 10-15% of my retirement
savings in the company stock.

JD wrote:

- quote -

Any company can fall on tough times. For every Berkshire Hathaway (worth
about $100K/share having returned 24%/yr over the last 4 decades) there
are the Enrons that implode, or the techs that were over bid and
couldn't keep up with forecasts. Look at the charts for EMC, it passed
$20/sh in late 98, touched $100, and currently is trading at $14. With
no dividend, you would be down 30% nearly 9 years later.
We know nothing about your company, not even the industry. There are
those who say 10% is the maximum one should hold in company stock,
others say your job is a large enough risk, zero is the right amount.
JOE

On Apr 9, 3:19 pm, "JD" <j...[at]zat.bzz> wrote:
- quote -


110-age in equities (so a person aged 30 is 80% equities)
100-age in equities (age 35 is 65% equity)

I like 20-(retirement age-current age)=%bonds (if difference is
greater than 20, then bonds are 0%). Age 30, retire at 55 difference
is 25, so 0% bonds. Age 36, difference is 19, so 1% bonds, 2% the
next year, 3% the next.

Some of this also depends on the return you need. If a person aged
46, which wants to retire at 65, and needs a 10% return, then this
"generalization" may not apply.

Moving to conservative investments (changing asset allocation) will be
as unique to the individual as the original allocation itself. Change
as you near retirement is my advice. How much you change is up to
individual.

I am planning to do the 20-(retirement age-current age). Because what
this does is force me to sell some gains (1% of portfolio) each year
as I get closer to retirement (except in a down year for equities).
The year I retire would be 80-20, at that point I would probably be
70-30 or 60-40 depending on account value and how much I had outside
tax advantaged accounts.

PeterL wrote:
- quote -

they just switched around the keeper-of-the-records but I have an
appointment with the company that manages the accounts/funds

- quote -

yes, they have expenses under 0.80, typically or less

jIM wrote:
- quote -

ok, guess I've been in that category also, not with all my wits but not at
wits end (see my OP for the results, ie. sometimes dumb investing makes good
returns)

so, let me ask you and thank you for the informative post on the percentages
and allocation, at what age would you foresee moving equity positions to
more conservative, ie. bonds or moneymarket/CD type funds? what if we are
hit by a mother-of-all-times inflation, ie. what moves/changes in the
allocations would you make?

again, thank you for an interesting post

On Apr 9, 2:01 am, "JD" <j...[at]zat.bzz> wrote:
- quote -

So what company manages your 401K? These funds are probably offered
by that company. You should be able to get some performance data from
the company managing these funds.

One quick question, are these funds no load funds?


- quote -

In general yes. It would be best to diversify your holdings. But a
large part does depend on what these funds are and how have they done.

joetaxpayer wrote:
- quote -

as far as I know, we also have a rule on the 401k, similar to that and the
way it works, the company will not match my 3% before-tax and place their 3%
into the company stock account, they will only put 10% of the matching money
into the company stock and if I have no other funds, they pick something
else and place the remaining 90% of their 3% match into that something else

if I were to have no more than 10% of all my 401k money in the company
stock, they they would still only place 10% of the matching 3% into that
fund.

now, they can't force me to move the money out since I had this 401k for
quite a number of years but I am of course looking for an alternative (see
the original post for reason "why I am not complaining..")

- quote -

It's OK to invest in company stock. Depends if/what you hold in IRAs,
and what the overall percentages are.

My wife's company does well, and she has a 69% return on her company
stock. It is 10% of her 401k contribution. We have my 401k, two
rollover IRAs and two Roth IRAs which are invested with less risk, and
the other 90% of my wife's 401k is also diversified.

- quote -

No... it would not make sense to put 20% into target 2010 and 20% into
target 2050...

You do want a mix of funds (the mix is called asset allocation).
There is not one correct mix. If you go to a website like T Rowe
Price (or fidelity or vanguard), and go to education link, and follow
links for "how to get started", you should find the information
helpful to the root cause of your original post. I am most familiar
with choices from T Rowe Price.

The getting started quiz will ask you questions. How long until
retirement, how much you have saved, tax brackets and how much risk
are you comfortable taking.

The answer will be "% equity-%bonds"

A 100% equity portfolio is aggressive. Could expect a 9-11% annual
return.
An 80-20 portfolio is moderately aggressive. Could expect a 7-9%
annual return.
A 60-40 portfolio is moderate growth. Could expect a 5-8% annual
return.

In all 3 cases, the % equity would be split between %large caps, % mid
caps, % small caps, % international. In the last two cases, the %
bonds would be split between government bonds, money markets, foreign
bonds and corporate bonds.

There is not one correct answer for asset allocation. My allocation
is 100% equity, 75% domestic equity and 25% foreign equity. The
overall allocation I shoot for in my 401k is

45% domestic large cap
15% domestic mid cap
15% domestic small cap
15% international large cap
10% international small cap

You allocation might be similar, might be different. This allocation
is the basis for much of my investment decisions and suggests exactly
what risks I am taking. I am 34 yo and 20-30 years from retirement.
A person with same age and more saved might invest more moderately, a
person the same age with more risk tolerance might invest more
aggressively as well.

Asset allocation is not an exact science, but it would be a good place
for you to start.

On Mon, 9 Apr 2007 07:23:37 -0500, "JD" <jd[at]zat.bzz> wrote:

- quote -

Some thoughts to consider: These "obscure" funds you mention are the
meat and potatos of a diversified asset allocation that should be the
core of an investment strategy. If the funds do not have ticker
symbols it is almost certain that they are institutional funds
provided to your 401K by an investment house. Your 401K manager,
meaning your company's investment committee, HR organization, or
whoever, should be providing you extensive information from the fund
company on the investment objectives, historical performance, fees,
etc. Either you have completely missed the message or your company is
abysmally failing to provide its employees with the minimum necessary
information to utilize the 401K correctly. This information is
normally supplied in a document called the Summary Plan Description.
You especially want to understand the fee structure and possible loads
applied to these funds. Note that in many cases "non-descript" funds
of the institutional variety may be outstanding investment vehicles
with very low fees.

Here are some references to 401K management that you may find
interesting:

http://www.dol.gov/ebsa/publications/401k_employee.html
http://www.dol.gov/ebsa/pdf/401krept.pdf

As to company stock in a 401K, that is a subject for much discussion.
One point of view is that you should avoid all investment in your own
company stock as much as possible and to do so in a lump sum move now.
However, there is a sometimes little appreciated tax nuance that one
might want to keep in mind. I would advise a Google search for the
concept of NUA-Net Unrealized Appreciation to review the tax treatment
of company stock when withdrawn (meaning rolled over at separation or
retirement) vs the tax treatment of other 401K/IRA investments when
withdrawn. I am not sure NUA applies to stock you voluntarily
purchase in a 401K vs company stock in the 401K that comes from
company contributions in kind or profit/performance sharing awards.

Otherwise very conventional advice would be to maintain no more than
5% of your investment in a single stock, although doing so in the
stock of one's employer is less advised.

Another question: What is the balance of your assets in accounts
other than the 401K? The fraction of your total assets represented
here is a significant consideration. Also, for example, do you have
significant potential assets in management stock options, which if you
do would argue again to reduce holdings of company stock in the 401K?

On Mon, 9 Apr 2007 07:39:07 -0500, "Andrew Koenig" <ark[at]acm.orgwrote:

- quote -

Not only can they send you the required information, they are required
by law to do so, and if this material has not been forthcoming,
something is seriously rotten in Denmark.

"JD" <jd[at]zat.bzz> wrote in message
news:57tk06F2f6n97U1[at]mid.individual.net...

- quote -

You might still be able to glean some information by finding out what
company manages the 401(k). If your employer publishes past performance
figures for the fund options, you can compare those figures with
corresponding figures from that company's funds in similar asset categories.
If you get a close match, you might have identified it.

Alternatively, perhaps they have some more detailed plan literature that
they can send you.

HW "Skip" Weldon wrote:
- quote -

not to a an IRA but to other funds within same 401k

if you read the entire thread, I did mention there are choices, the other choices are
non-descript names of funds like target 2015, target 2020. (etc). international
equity, diversified bond and such but there is no real information behind these names
and no ticker symbols

so, my instinct now, not knowledge not research, is to slowly move some chunks to
diversified bond, international equity, target something etc.. as I don't know how
long the company stock will remain at current level

what I don't know, is there some strategy in moving the entire 100% or should it be
done in small amounts as it's hard to figure the movement of the company stock being
up or down one day to the next, or not worry about such detail at all and just keep
moving (as suggested in another reply) about 10% each month to some other fund or
funds

also, does that mean it's smart to not have anything in the company stock or no more
than 10% of entire portfolio?

On Mon, 9 Apr 2007 03:09:00 -0500, "Bucky" <uw_badgers[at]email.comwrote:

- quote -

Bucky I jumped to the same (incorrect) conclusion from the OPs post.
He apparently does have other choices, and is choosing 100% employer
stock. Sadly, until he does some homework (contact his HR, the
Custodian, etc.) and can tell us what those other choices are, we
can't help much.


-HW "Skip" Weldon
Columbia, SC

redmonds[at]sprynet.com wrote:
- quote -

no, see other replies in thread. that was my choice as I didn't know how the other
funds would do as they are non-descipt, generic names, no ticker symbols

PeterL wrote:
- quote -

no, that is, no names other than the description, ie. international stock fund,
small/mid cap stock fund, no ticker symbols

I assume it would be best to take my 100% company stock and got 20%-20%-20% etc across
available funds?

On Apr 8, 5:51 am, "JD" <j...[at]zat.bzz> wrote:
- quote -

All conventional wisdom strongly discourages investing 401k in your
own company stock (or any one company).

Your strategy is simple: every month, exchange about 10% of your
company stock into some diversified fund(s). Within a year, you'll
have diversified your 401k.

On Apr 8, 1:30 pm, redmo...[at]sprynet.com wrote:
- quote -

no, the OP just meant that he chose to only invest in his own company