Yah sure. 0.03% of $1,000,000 is $300/yr. More than $100/yr, but still negligible.
As I said (and you copied): Yes, it’s not a huge difference.
AJ
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My question is does your TPA charge a fee?
Sorry, you lost me on TPA. No fees in the 401(k), other than the expense ratio on the investments. Same as my IRA.
AJ
If you plan to keep your money in a 401(k) after retirement they may charge you record-keeping fees that were paid for by the employer prior to retirement. Might not make a big difference, but something to be aware of.
1poorguy: Mortgage will be paid off in about 2 or 3 years at our current rate of paying. If stocks recover, I may just pay it off at that point rather than maintain a mortgage. Right now I think cash should be going into equities while they’re on sale, and I can liquidate those to pay off the loan when equities have recovered.
Curious - what equities do you consider to be on sale?
Most 401k plans use a third party administrator to test the plan and file 5500’s. Generally they change for those services. Also, IRA “requires” a fidelity bond for plans that generally cost money. If you are just a participant then those charges will hit apply at the plan level, not the participant level. that was the genesis of my question.
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Curious - what equities do you consider to be on sale?
Pretty much most of them. S&P 500 hit correction territory which is usually a buy signal.
https://intelligent.schwab.com/article/stock-market-correcti….
Since 1974, the S&P 500 has risen an average of more than 8% one month after a market correction bottom and more than 24% one year later.
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What Hawkwin said.
Pretty much any company that is hitting (or exceeding) their numbers, but has had a sharp decline in stock price, is on sale. Some Saul stocks, some of my holdings (though not all!). I don’t want to start recommending stocks. But this correction has put many great companies on sale.
1pg
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Most 401k plans use a third party administrator to test the plan and file 5500’s. Generally they change for those services.
Ahh, TPA = Third Party Administrator?
Nope. Been retired since 2017, haven’t been charged any fees for the 401(k) - recordkeeping, TPA or otherwise. I guess my former company covers them.
I will be exiting my 401(k) this year because I’m going to take advantage of NUA on my company stock, so I have to completely exit the plan. So, I will end up paying 0.03% - 0.04% on my total market investments, instead of 0.01% - not a huge deal, but it was nice while it lasted.
AJ
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Pretty much most of them. S&P 500 hit correction territory which is usually a buy signal.- Hawkwin
I am setting on a bunch of cash and am ready to put much of it into the market when the time is right. Although the S&P is down, I am not even close to feeling compelled to move in just yet.
Here are some numbers
S&P 500 peak 1/3/22 = $4,797
S&P 500 close 2/7/22 = $4,484
Pundits say a 10% or more drop is correction territory. Current drop is 6.5%.
I am sure there are some good companies individually that have dropped ten or more percent and represent current bargains, but to say that the market is in a correction is premature. We seem to be trending that direction but are not there yet. So I will be setting on the sidelines a while longer. YMMV.
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If I read that correctly, NUA is for tax-deferred accounts. My company stock is ESPP. Not tax-deferred. It’s been a while since I sold any, but as I recall we have to report qualified dispositions, and those are reflected on our W2s. Which, when we report the sale on Sched D, ends up with no cap gain (or even a small “loss”).
I’m assuming I still have to do that in retirement -another question for HR!
The only tax deferred accounts we have are our 401Ks, and some very small IRAs. Most of the tax deferred monies are in the 401Ks. I’ll have to look at how fees are handled, too. If they are charging them, either the company is paying them or they are debiting the account. I don’t ever send a check for any fees, nor am I notified of any fees due.
We also have new HSA accounts, which I need to learn better how to use in retirement. I read an article a while back that indicated it was a tool that can be used, tax-deferred. As we were planning to retire this year anyway, and our company just started offering HSA plans, we signed-up just to get the account (which we can keep for life regardless of employment status).
1poorguy
Here are some numbers
S&P 500 peak 1/3/22 = $4,797
S&P 500 close 2/7/22 = $4,484
Pundits say a 10% or more drop is correction territory. Current drop is 6.5%.
…
but to say that the market is in a correction is premature
We ALREADY had the correction on 1/24. We were down 10% on that day - then all the buying kicked in and brought it back.
It has climbed 3.5% since then, go figure.
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I’ll have to look at how fees are handled, too. If they are charging them, either the company is paying them or they are debiting the account. I don’t ever send a check for any fees, nor am I notified of any fees due. - 1pg
There are different levels of transparency the sponsoring company can set up with the 401K provider. One of those choices is to deduct fund expenses from returns before allocating to participant accounts. In that case the fee would be invisible on your statement and the investment return that you do see would be slightly reduced.
My company stock is ESPP. Not tax-deferred.
Then you are correct, it would not apply. NUA only applies to stock held within your 401k.
Here are some numbers
S&P 500 peak 1/3/22 = $4,797
S&P 500 close 2/7/22 = $4,484
Pundits say a 10% or more drop is correction territory. Current drop is 6.5%.
…
but to say that the market is in a correction is premature
We ALREADY had the correction on 1/24. We were down 10% on that day - then all the buying kicked in and brought it back.
It has climbed 3.5% since then, go figure. - hawkwin
OK, I understand. I don’t watch closely enough to see the intra-day moves. That said, the correction I am looking for must be robust, not only dip below ten momentarily but go even lower and hang there a few days, long enough for it to generate some panic in the media.
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Pretty much any company that is hitting (or exceeding) their numbers, but has had a sharp decline in stock price, is on sale. Some Saul stocks, some of my holdings (though not all!). I don’t want to start recommending stocks. But this correction has put many great companies on sale.
Wondering about FB (facebook). Bad numbers, though. Took a huge hit based on a bad report.
Everybody seems to think it has a strong moat.
Might be worthwhile to take a nibble.
but go even lower and hang there a few days, long enough for it to generate some panic in the media.
That is a very squishy goal that even you can’t measure beyond “I know it when I see it.” And of course, you may not see it again for another two years (or 19 months as corrections average).
The most common length of a correction is a single day - 10 of the last 18 were a single day (some were double dips). And, not including the Covid recession, rarely go more than 12% - 12 of the last 18 were less than 12%.
https://www.nbcnews.com/news/us-news/what-s-market-correctio…
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Pundits say a 10% or more drop is correction territory. Current drop is 6.5%.
I am sure there are some good companies individually that have dropped ten or more percent and represent current bargains, but to say that the market is in a correction is premature.
I occasionally refer to my quotes file. Here’s a set on this topic:
As to volatility, we know that a 10% correction comes around every once each 2 years, and that we can count on three corrections of 5% over that same time period. We cannot predict these, and have yet to find anyone else who can. We simply accept this as a part of investing, and compose our portfolios with that in mind We also try to make sure that emotionally, we are prepared for these inevitable hiccups. -- Barry Ritholtz
and another:
Over the last 100 years the stock market has experienced on average a 5% correction three times per year, a 10% correction once per year and a 20% correction once every three and a half years.
Stock market investors should expect to lose a little money quite often, see a correction occasionally, lose a decent amount every couple years and lose a lot of money on an Olympics-like schedule.
5% losses three times a year.
10% losses once a year.
15% losses once every two years.
20% losses once every three to four years
This realization that you know something is eventually going to happen, but you have no control over when or why it will happen can be extremely liberating as an investor. Understanding what you do and don’t know is a huge step in the right direction.
[http://awealthofcommonsense.com/2017/01/how-market-crashes-h...](http://awealthofcommonsense.com/2017/01/how-market-crashes-happen/)
"If investing in equities was as easy on the nerves as cash then you’d earn the same negligible return that you can expect from cash."
"You can expect a lurch of plus or minus 20% two out of every three years for developed world equities."
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Hi 1PG,
You may want to look into doing a NUA (Net Unrealized Appreciation) with your 401K if it contains a large amount of company stock…
tb2
>>but go even lower and hang there a few days, long enough for it to generate some panic in the media.<<
That is a very squishy goal that even you can’t measure beyond “I know it when I see it.” And of course, you may not see it again for another two years (or 19 months as corrections average).
The most common length of a correction is a single day - 10 of the last 18 were a single day (some were double dips). And, not including the Covid recession, rarely go more than 12% - 12 of the last 18 were less than 12%. - hawkwin
Thank you for that perspective. I never realized that typical corrections were such ephemeral events. I did do some buying during the Covid panic that has paid off very well. But I am not watching close enough to catch a more traditional one. I will have to rethink my investment trigger, but I feel we are just so overbought right now that I wanted to be hit over the head to be comfortable it is time.
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Pundits say a 10% or more drop is correction territory. Current drop is 6.5%.
I am sure there are some good companies individually that have dropped ten or more percent and represent current bargains, but to say that the market is in a correction is premature.
I occasionally refer to my quotes file. Here’s a set on this topic: - Rayvt
Thanks Ray, good stuff. I think I will start my own quotes file. It will provide me comfort when whatever I buy inevitably drops a few more percent right after I buy it.