Merrill Lynch 401k Questions

[hornadylnl]

Just started my new job and they use Merrill Lynch for 401k. My old job was Fidelity so I'm totally new to Merrill. It looks like my current investment options are as follows. I have no idea which ones to choose. I think I'm currently defaulted to 2040 Target Date Fund.
Domestic
Diversified Real Asset Fund
US Large Cap Equity Fund
US Large Cap Equity Index Fund
US SMID Equity Fund
US SMID Equity Index Fund

International
Emerging Markets Equity Fund
International Developed EQ FD
International Developed EQ IDX

Bond/Fixed Income
US Bond Fund
US Bond Index Fund

Money Market
Money Market Fund

Allocation Funds
2005 Target Date Fund
all the way up to 2055 Target Date Fund


Looks like almost all of these have a Jan 2013 inception date. I'm not seeing any sort of star rating on each of these so I don't really know what to do. With my old account, I had about 75% in a target date fund and the other 25% split between 2-3 other funds. Between the 10% I'm putting in and the 4% I'm getting in match, I should be putting in nearly $10k per year.

 

[RSW]

I would say start by checking the fees involved in Target Date Funds. They are usually higher than other funds that are usually available in a 401k.

Just started my new job and they use Merrill Lynch for 401k. My old job was Fidelity so I'm totally new to Merrill. It looks like my current investment options are as follows. I have no idea which ones to choose. I think I'm currently defaulted to 2040 Target Date Fund.
Domestic
Diversified Real Asset Fund
US Large Cap Equity Fund
US Large Cap Equity Index Fund
US SMID Equity Fund
US SMID Equity Index Fund

International
Emerging Markets Equity Fund
International Developed EQ FD
International Developed EQ IDX

Bond/Fixed Income
US Bond Fund
US Bond Index Fund

Money Market
Money Market Fund

Allocation Funds
2005 Target Date Fund
all the way up to 2055 Target Date Fund


Looks like almost all of these have a Jan 2013 inception date. I'm not seeing any sort of star rating on each of these so I don't really know what to do. With my old account, I had about 75% in a target date fund and the other 25% split between 2-3 other funds. Between the 10% I'm putting in and the 4% I'm getting in match, I should be putting in nearly $10k per year.

 

[hoosierdoc]

Can you look at the fund managers and see others they manage? Can give you an idea how good they are

 

[CountryBoy19]

Do the fees on the index funds follow suit with industry "norms" for fees?

Generally you can't beat an index fund vs. an actively managed fund because the fee difference will make up any difference in gains you would have between the 2. However, if the expense ratio and fees are the same then you will likely be better with an actively managed fund.

How close are you to retirement? How much risk are you willing to take on? Is this your only retirement asset? How are your other retirement assets allocated? What is your retirement asset allocation plan and how far off from that are you?

You should have an asset allocation plan and then invest accordingly to keep as close to that plan as possible.

Your retirement age should set a "basic" risk level, other investments/lifestyle etc can account for "adjustments" to that risk level, and then invest accordingly.

For me, I'm 30-40 years from retirement, my 401k isn't my only retirement income source (pension, debt-free, etc are also big factors in your retirement "assets"), and I'm willing to take on risk because I know I have time on my side and the long-run means rather large gains in risky investments. My personal investments (play money) are 99% allocated to US based stocks. My retirement accounts are 10% cash equivalents/bonds, 70% US based stocks, 20% foreign stocks. Those allocations have treated me well. Those allocations DID NOT treat people well if they were 1-5 years from retirement in 2007.

If you don't actively "manage" your retirement and you just want it to be all done for you go with a target date retirement fund. You will pay a little more in fees but it will ultimately mean that you won't lose your pants 1-5 yrs from retirement because you screwed up your asset allocation...

 

[spec4]

The two US Large Cap funds are what I would take a hard look at. No bonds as can't see a bond fund in a 401K, you want growth and IMO bonds in a 401K don't do it. I'd avoid the international stuff or maybe a small (5 to 10%) allocation. No money markets. The target date would round me out.

 

[hornadylnl]

Do the fees on the index funds follow suit with industry "norms" for fees?

Generally you can't beat an index fund vs. an actively managed fund because the fee difference will make up any difference in gains you would have between the 2. However, if the expense ratio and fees are the same then you will likely be better with an actively managed fund.

How close are you to retirement? I'm 38 but hope to be done with the rat race in 15 to 20 years.

How much risk are you willing to take on? ​Not a ton. I'm currently putting in 10% and don't like the thought of pissing it away. I don't foresee ever going higher than 10% contribution for the sheer fact that I think the government will take 401k's over by the time I get to draw.

Is this your only retirement asset? I have other cash assets tied up in CD's but don't plan on using it for retirement. With the pay raise, I'm also planning on banking $300 every week above and beyond my 401k contribution.

How are your other retirement assets allocated? What is your retirement asset allocation plan and how far off from that are you?

You should have an asset allocation plan and then invest accordingly to keep as close to that plan as possible.

Your retirement age should set a "basic" risk level, other investments/lifestyle etc can account for "adjustments" to that risk level, and then invest accordingly.

For me, I'm 30-40 years from retirement, my 401k isn't my only retirement income source (pension, debt-free, etc are also big factors in your retirement "assets"), and I'm willing to take on risk because I know I have time on my side and the long-run means rather large gains in risky investments. My personal investments (play money) are 99% allocated to US based stocks. My retirement accounts are 10% cash equivalents/bonds, 70% US based stocks, 20% foreign stocks. Those allocations have treated me well. Those allocations DID NOT treat people well if they were 1-5 years from retirement in 2007.

If you don't actively "manage" your retirement and you just want it to be all done for you go with a target date retirement fund. You will pay a little more in fees but it will ultimately mean that you won't lose your pants 1-5 yrs from retirement because you screwed up your asset allocation...

Sorry for the delay getting back to this thread. Answered some of your questions in red above. I'm thinking of doing about 20% in something other than the target date fund.

 

[hornadylnl]

What's strange is I can't find any info for the symbols listed on Merrill's site. The US Large Cap Equity Index Fund for example is listed as ZNTCST. I can't find anything on it.

 

[Leo]

I am far from an expert on investing, but Merrill Lynch turned $370K into $270K over about 9 months. I could not stand that much loss so I had them put it is all fixed "low risk" funds. They turned that $270K into $80 grand in 90 more days. Way too many politically connected people got rich in the whole leman brothers crash to make me think it was not premeditated thievery. I'll bury my money under a trash can in the park before they get any more from me. During that time all the other 401K's were getting raped, so I don't know if any of them are worth trusting.

Since your research has only turned up questions and no answers found, I would consider that at least a caution flag if not a red flag.

 

[CountryBoy19]

I'm 38 but hope to be done with the rat race in 15 to 20 years.

So you can handle some risk... even if we see the worst crash in history within the next 5 years that leaves you 10-15 years for recovery. Unfortunately, what that means is if we do see a horrible crash you wouldn't see much growth until late in your career. That would pretty much kill the best thing you have going for you (time + compounding gains). But dollar-cost averaging will help you out a lot if that does happen...

I don't foresee ever going higher than 10% contribution for the sheer fact that I think the government will take 401k's over by the time I get to draw.

I don't mean to question you, but anybody that makes this statement doesn't know much at all about how the financial markets work. There may be corruption, there may be crooked people out there, but I assure you that there is NO way for the government to take over 401k's without plowing themselves and the entire country under. While I believe we have some traitors in our government, I don't think any of them truly want to see this country crash and burn on purpose, so I don't foresee this EVER happening. What would be more likely is that they would heavily tax your withdrawals from your 401k... I don't see this happening either...

have other cash assets tied up in CD's but don't plan on using it for retirement. With the pay raise, I'm also planning on banking $300 every week above and beyond my 401k contribution.

So basically, if the markets crash in the last 5-10 years of your career and you are still in riskier investments can you make it through a few years of retirement without the need to withdraw from your 401K? That is the basic idea behind transferring to safer investments later in your career. It is to protect your assets. Generally the only time people lose a bunch is if the markets crash and they panic and sell (locking in losses) or they retire and HAVE to make withdrawals to get by (locking in the losses).

As long as you can live with market ups and downs, I recommend some "risk" but not the risky stuff. Large caps are less risky, less volatile, foreign developed markets are less risky than emerging markets... based upon what you have said here, if I were in your position I would choose from the funds below.


US Large Cap Equity Index Fund 70%
International Developed EQ IDX 30%

Alternates (for a bit more risk)
US SMID Equity Index Fund
Diversified Real Asset Fund (note, I personally wouldn't invest in this, but it can net you some good returns in the right conditions)

 

[hornadylnl]

I am far from an expert on investing, but Merrill Lynch turned $370K into $270K over about 9 months. I could not stand that much loss so I had them put it is all fixed "low risk" funds. They turned that $270K into $80 grand in 90 more days. Way too many politically connected people got rich in the whole leman brothers crash to make me think it was not premeditated thievery. I'll bury my money under a trash can in the park before they get any more from me. During that time all the other 401K's were getting raped, so I don't know if any of them are worth trusting.

Since your research has only turned up questions and no answers found, I would consider that at least a caution flag if not a red flag.

If it isn't the banks taking it, the government will. I feel that at the very least, by the time I go to collect on it, my 401k will either be nationalized or get me means tested out of social security.

 

[hornadylnl]

So you can handle some risk... even if we see the worst crash in history within the next 5 years that leaves you 10-15 years for recovery. Unfortunately, what that means is if we do see a horrible crash you wouldn't see much growth until late in your career. That would pretty much kill the best thing you have going for you (time + compounding gains). But dollar-cost averaging will help you out a lot if that does happen...

[/COLOR]
I don't mean to question you, but anybody that makes this statement doesn't know much at all about how the financial markets work. There may be corruption, there may be crooked people out there, but I assure you that there is NO way for the government to take over 401k's without plowing themselves and the entire country under. While I believe we have some traitors in our government, I don't think any of them truly want to see this country crash and burn on purpose, so I don't foresee this EVER happening. What would be more likely is that they would heavily tax your withdrawals from your 401k... I don't see this happening either...


So basically, if the markets crash in the last 5-10 years of your career and you are still in riskier investments can you make it through a few years of retirement without the need to withdraw from your 401K? That is the basic idea behind transferring to safer investments later in your career. It is to protect your assets. Generally the only time people lose a bunch is if the markets crash and they panic and sell (locking in losses) or they retire and HAVE to make withdrawals to get by (locking in the losses).

As long as you can live with market ups and downs, I recommend some "risk" but not the risky stuff. Large caps are less risky, less volatile, foreign developed markets are less risky than emerging markets... based upon what you have said here, if I were in your position I would choose from the funds below.


US Large Cap Equity Index Fund 70%
International Developed EQ IDX 30%

Alternates (for a bit more risk)
US SMID Equity Index Fund
Diversified Real Asset Fund (note, I personally wouldn't invest in this, but it can net you some good returns in the right conditions)

I'll be rolling over approximately $65-70k from Fidelity to this account. Are these funds I've listed here funds you can actually find info on? The website gives return percentages but almost every single one of them is new as of January 2013 so you can't get a 5, 10, 20 year snapshot of what these funds have done. I'm not seeing their tickers come up anywhere either.

I just can't see the government being able to keep their hands out of 401k's. Another big crash or 2 and people losing their retirements like Leo described upthread, the people will be begging for the government to nationalize them.

 

[CountryBoy19]

I'll be rolling over approximately $65-70k from Fidelity to this account. Are these funds I've listed here funds you can actually find info on? The website gives return percentages but almost every single one of them is new as of January 2013 so you can't get a 5, 10, 20 year snapshot of what these funds have done. I'm not seeing their tickers come up anywhere either.

I just can't see the government being able to keep their hands out of 401k's. Another big crash or 2 and people losing their retirements like Leo described upthread, the people will be begging for the government to nationalize them.

I don't know much about merril lynch, but I know a bit about Fidelity. IMHO, I wouldn't roll my 401k out of Fidelity if I had one. Fidelity is one of the best places to have one (next to Vanguard in my personal opinion).

I know it's a bit of a hassle to manage multiple 401k's but it might be worth keeping them separate, especially considering what Leo had to say about Merril Lynch. If you don't know enough about ML but know your money is fairly safe where it is, I wouldn't move it. Of course that's all null & void if you have a forced roll-over situation...

No I don't know squat about those funds. I'm judging solely based upon the name what they should hold. Think of them as mutual funds. The name implies the allocations and relative risk levels...

 

[Kirk Freeman]

Yeah, if your return is strong at Fidelity and the Beta is solid, you may consider standing pat. Or maybe just move a couple of K if they will let you.

Do you have to leave Fidelty, horn?

my 401k will either be nationalized or get me means tested out of social security.

Sadly this is a reasonable prediction IMO.

 

[hornadylnl]

I don't know if I can leave my money in Fidelity account or not. I'll have to start making some phone calls this week.