I have a 401(k) with my company, and they match my contributions 50 cents on the dollar. It’s a pretty sweet deal. I get free money just for saving for retirement. If you look at my Investing articles you’ll see that I always recommend people contribute to a company matching 401(k) before they contributed to a Roth IRA. You can’t pass up the free money! Anyway, I thought that I would share with you what my 401(k) has been doing lately. The market has been up and down this past quarter, but I ended up on top. My YTD return for the first quarter of 2007 was 7.6 percent. It would have been much higher if you take away that 400 point drop back in February. Or maybe it was March? I can’t remember, because I blocked it out of my memory. People were ready to jump off the bridges after that day, but the market rebounded nicely, and now it’s hit another milestone. The Dow Jones Industrial Average hit 13,000. I am pretty satisfied with my mutual fund performances so far. I’ve had the account for about 18 months now, and last year’s YTD return was 12.5 percent.
Here are the funds in my 401(k) today:
These are all fairly aggressive growth stock mutual funds, but they all have track records longer than 10 years. I am only 25, so I have plenty of time to ride out the waves of the stock market. Davis New York Venture has been around since 1959, and American Growth has been around since 1973. They all perform over 10% returns over a 10 year period. You’ll also notice that I have the Europacific fund in there to balance out when the U.S. market is not doing well.
Here is a chart showing my net investment vs. my market value of my investments.
You’ll see that as time goes on, the line representing the market value of my investments begins to slowly pull away from my net investment. This is only over the last quarter, but the last 18 months looks very similar. You’ll see that the market value actually dipped below what I invested for a short time, because of the huge market drop that occurred.
Overall, I’m happy with the funds that I have right now, and they are performing adequately. Once my wife finishes school and starts working, I’ll be able to start contributing a great deal more to this account. If you have any questions about your 401(k) or 403(b), definitely schedule a time with a financial advisor that is managing your company’s plan. Since you are already investing with them, they should give you unbiased information to help you tweak you with the funds to put in your plan with the financial goals you want to achieve.