Apr 182013
"Pioneers Festival Investor Day,"  Photo by Heisenberg Media.  From the Flickr Creative Commons.

“Pioneers Festival Investor Day,” Photo by Heisenberg Media. From the Flickr Creative Commons.

This week, I am reviewing my finances. One of the tweaks I made to our financial systems last year was to subscribe to a paid investing advice newsletter. Since I don’t know all that much about investing or stock picking, I figured that receiving some specific advice from an investing expert would give me some concrete suggestions about what to invest in.

How did it work out for me?

Sadly, not so well.

There are a million different investing newsletters out there. All of them market themselves on the reputation of one or more seasoned stockpickers on the staff. They sound really impressive. The newsletters are generally written well and give you an investing recommendation along with the various reasons supporting the recommendation. There is usually some supporting economic data, stock data, industry trends or quotes from millionaire investors that makes the recommendation sound even more convincing.

The only problem is that the stock market isn’t a scientific problem to be solved. You can’t just follow a pattern of economic facts to stock market success. The investing newsletter I chose to follow last year ended up being “wrong” on just about every piece of advice they gave. It was written by intelligent people with a lot of experience and facts. The reasoning was a plausible guess about market conditions but the market went the other direction.

Fortunately, we did not blindly follow the advice and invest actual money. Instead, we were lazy. We read the recommendations but thought about it rather than acting on it. We made one investing decision based on the newsletter advice, which ended up being an OK decision but probably not the best one we could have made.

This year, I am trying another investing newsletter with a different perspective. So far, I can’t say I am really impressed. When I read the investment recommendations, I generally think, “Why that company? I never shop there.” or “If we hit economic difficulty, I don’t want to own that stock.”

After my experience so far with these investing newsletters, I have a few lessons learned:

1) There is no shortcut to investing success. Reading one newsletter is not a substitute for finding your own investments and developing your own investing method. The newsletter should supplement and not replace your other investing reading.

2) Patience is a virtue. If you choose an investing newsletter with a strong or unusual opinion, wait at least a few months to just read the advice, research and follow the market before acting on the guidance.

3) Watch for hidden agendas.
Some of these investor newsletters seem to have an ulterior motive. Think about whether the investing newsletter is trying to boost a stock price so that it can profit while you lose. If your gut instinct says that something is a bad investment, it probably is.

4) Your eyes will be opened to the depth of the investing world. If you gain nothing else from an investing newsletter, you will at least learn about the millions of different types of investments out there. Portfolios are not just limited to stocks, bonds and CD’s. There are new and sophisticated types of investments that are accessible to anyone willing to learn how they work.

5) The investing advice world runs on paper. The two investing newsletters I subscribed to both provide their main newsletters via paper copy and snail mail. It seems completely backward and out of touch with the modern world but it ended up being a brilliant choice. We get so little via hard copy mail anymore that when the investing newsletter arrives, I find myself drawn to reading it. I also seem to comprehend more when I read it on paper than on a screen. Since there is an obvious time lag between the stock recommendation and the printing of the newsletter, it also provides an instant check for the long-term investor. Has the investment performed well since the recommendation was made? If not, it probably isn’t the investment for me.

6) Expect a lot and know how to cancel. There is so much free investing advice out there, if you are going to pay for advice, you want something that is easy-to-understand, relevant and that performs well. At the end of each subscription term, if you aren’t getting your money’s worth, be ready to switch and try something else.

Do you subscribe to paid investing or financial advice? What tips would you share about choosing a good investor service? Please share in the comments.

 Posted by on April 18, 2013 General Tagged with: , ,
Apr 172013
"Fluorescent Servitude."  Photo by Michael C. Rael.  From the Flickr Creative Commons.

“Fluorescent Servitude.” Photo by Michael C. Rael. From the Flickr Creative Commons.

Since I have just tackled the thorny issue of college savings, why not jump next into the even more thorny issue of retirement savings!

My money strategy is to tackle all of these difficult issues head on. I would rather know now if I am going to have a major problem in 30 years than push it off to worry about another day. So far, the strategy seems to be working. Even if you can’t fix everything wrong with your retirement savings plan, just by paying it some attention, you will start to make at least some positive progress.

Last year, I started a tradition of formally reviewing my 401(k) savings and creating a short written report about how we are doing. (You can download the template I use and some instructions about how to use it here.)

2012 was a terrific year for 401(k)s!

Mutual fund companies and retirement plan purveyors couldn’t ask for a better marketing year for 401(k)s than 2012. In our plans, every single fund increased in value in 2012. Nothing lost money. Nothing! You couldn’t pick a bad investment. Whether it was stocks or bonds or international, it all made money. Just because of the positivity, you should do the detailed 401(k) analysis for 2012.

The best investment of 2012: stocks

If you could time the market, in 2011, you would have put all of your money into bonds but then, in 2012, you would shift it all to stocks. Stocks performed fabulously in 2012! We had gains in some funds of over 35% in one year! Wow! If only every year could be half this good.

2013, what will happen?

The numbers looked so good in 2012 that they honestly scared me. How can every single mutual fund make money? There were zero losing investments? This almost never happens. Yes, the economy seems to be recovering but to have this type of tremendous gains . . . it feels a bit bubble-ish.

So far, 2013 is off to a bit of a rocky start and we probably aren’t going to see 2012 repeat itself. It doesn’t mean it is time to get out of stocks, but rather accept that there is risk in every investment and to make sure your investments are appropriately diversified for your own savings goals.

Do you take the time to check in with your retirement savings each year? What lessons did you learn from 2012? Please share in the comments.

 Posted by on April 17, 2013 General Tagged with: , ,
Apr 042012

"Mrs. Blair Banister, Assistant to the Treasurer of the United States takes a look in the family purse before attending the annual dinner of the National Women's Press Club." (1936-1937) Photo by Harris & Ewing. From the Library of Congress Prints & Photographs Division.

It’s a bit past the end of March but time to recap March’s posts on the investing mindset as well as highlight favorite comments and recent organizational news stories.

This month, we discussed several facets of the investing mindset—strategies to organize your thinking about your finances to make good decisions that result in financial rewards.

1) Invest in what you know. We started off with a reminder that when you are trying to invest in something you don’t understand, you are likely to make mistakes. So when you are faced with a situation you have no experience with, you need to make the time to do your research and learn as much as you can to make informed decisions. Never assume that you can just guess and coast by or follow what everyone else is doing.

Anonymous commented:

“The only person looking out for your interest when it comes to your money is you.” Well put. Yes, finances can be complicated, but not necessarily incomprehensible. If your banker or financial advisor isn’t willing to take the time to explain things and help you make the right kind of risk decisions that allow you to sleep at night, it’s time to make some changes.”

Matt commented:

“As always, solid, lucid advice. I think it’s also important to remember that ordinary people in the investment market are competing with professionals who devote their careers to it. We can take advantage of their skills but it will cost us. Or we can concentrate on understanding a specific sector and place our own bets. There it’s no easy, simple way to beat the market.”

2) Always remember the difference between shopping and investing. We looked at the recent resurgence in couponing and discussed several other examples where people try to use shopping as a “savings” or “investment” strategy.

Ruth filled me in on an aspect of couponing I did not understand:

“. . . a girlfriend printed like 80 coupons for KY Jelly that was on sale–something most of us do not need 20 of! Well, at the commissary (she checks every place you can buy stuff on earth thru site shopping and also various websites)–with the coupoon price she could actually get $.80 back because the coupon was worth more than the original price in this case—so she used the rest of the money on groceries. So the goal is NOT to buy your core staples–it’s to “make money” on oddball stuff so you don’t have to pay for groceries. MOST people actually end up donating the extra unneeded items to shelters etc. And then they know which stores on which days double coupons, etc. It’s truly an art!!”

Angela commented:

“I have also heard the goal of couponing is not to save on stuff you do want, but to make money on other items you may or May not want/need so you can spend THAT money on wanted items… But, since I place a value on my time, the hours I’d need to learn to play / prepare to shop / that game do not equal the ‘savings.’ I realize that once you figured the system out and it (maybe) equalized time spent vs money saved, there might be real savings to be had… But I just find other stuff I’d rather be doing with my time!”

This month as I followed a coupon blogger I learned quite a bit about how couponing works for an expert. Essentially, you need to clip and save high dollar value coupons and hope that there is a massive sale before the coupon expires. You can then use the coupon to get either free or heavily discounted items. In March, this particular blogger got contact lens solution and dog food totally for free with coupons. For my shopping style, I have yet to be convinced that coupons are a winning strategy for me but if I see a rare coupon that is for something I actually buy, I make sure to use it or stock up when non-perishable items are on sale.

3) Maintain a healthy skepticism about all things. Particularly when it comes to money, you always have to stop and think about what is motivating someone to make a particular recommendation. We also have to be realistic and know that when it comes to money, there are many cases where people don’t play by the rules and you need to be alert to looking for fraud or other unethical manipulations.

Lou commented:

“There are so many stories of this nature out there that are quite frightening. I have stopped reading about them for a while, and am not sure when I will resume. For those that don’t play by the rules, I wish there were faster ways to catch them so as to prevent any loss to those playing fairly.”

4) Good investors are always open to learning math and calculation methods. Yes, math is not just for school students. We all need to keep our math skills sharp. I gave an example from The Wall Street Journal showing a common error made when estimating returns on a portfolio.

On this front, this month I learned about a website called Bedtime Math Problem that encourages parents to tuck their kids in at night by reading a story AND doing a simple math problem! It’s a simple but brilliant concept. We have started doing this at our house. You can sign up here for their free email list.

5) Restate a complex investing scenario into something you do understand. It is all too easy to just give up when trying to understand something requiring detailed focus and concentration like money management. But we don’t have to give up. There are many ways to look at any situation and even the least sophisticated among us can have at least some understanding of what is going on. We took one of the most complicated financial situations out there, the U.S. government’s financial situation, and proportionately scaled down the numbers to reflect what the government’s finances would look like if the government was a typical middle class family.

6) A good investor makes decisions first by numbers and secondly by emotions. We again looked at the U.S. government’s financial situation and tried to understand why the budget numbers never add up. I summarized the three main budget proposals from Democrats, Republicans and the Tea Party. We also looked at statements from Comptroller Dodaro in the latest report on the government’s finances indicating that regardless of what budget measures are taken, the government has a lot of financial clean-up and organization to do.

7) Past performance does not guarantee future success but history is an excellent teacher. I took a look at how my 401(k) savings did last year and gave you a form that you can use to check up on your own investments.

Other posts:

A reminder about daylight savings time and taxes. I also gave a tax organizing tip to make filing next year a little less painful. For those with taxes still to file, we are now at 13 days and counting.

I continued my own investor education with reviews of two books:

First, I Will Teach You to Be Rich by Ramit Sethi. I think everyone should have at least one finance guru to follow. If Suze Orman does not excite you, give Ramit’s advice a try. He comes at financial management from a slightly different perspective and particularly appeals to a younger audience. He is going to start answering more questions from readers on his YouTube channel. You can watch his most recent (hilarious) answer here.

Second, I reviewed the book Aftershock with the ominous subtitle, “Protect Yourself and Profit in the Next Global Financial Meltdown.” I really hope that this situation never comes to pass but we can all learn a lot from the economic discussion in this book. We also have to learn not to be afraid of terrifying financial news and instead arm ourselves with a Plan B for when things don’t go as we hoped.

Fun posts:

I wrote a post about the 24 Hours of Le Mans race to be held in July as a treat for my Dad’s birthday.

I also showed you my children’s St. Patrick’s Day outfits this year that also saved me some “green” as I spent just $4.50 on accessories!

Ruly Ruth continued our healthy cooking series with a delicious pears with berries dessert review.

Money News

The Atlantic published a fascinating article called Prices Are People: A Short History of Working and Spending Money about economic trends since 1974. This article was part of a new series called The Money Report giving a consumer-eye view of the world. Article titles include: “How Investing Turns Nice People Into Psychopaths.”

Smart Money published a fascinating article “Fix Your 401(k)”about the myriad of problems in employer-sponsored 401(k) plans.

“I personally think the 401(k) should be abolished.”

–Matt Goff, a Houston financial adviser whose practice serves small-business owners needing help with their company retirement plans, quoted in “Fix Your 401(k), SmartMoney Magazine, March 15, 2012.

Politics aside, a beautiful piece of writing From George Will in The Washington Post about how trying to be too organized with the economy might be a problem and that we need to leave room for surprise and creativity. Love the highly quotable phrase “a ruinous itch for tidiness.”

“America now is divided between those who find this social churning unnerving and those who find it exhilarating. What Virginia Postrel postulated in 1998 in ‘The Future and Its Enemies: The Growing Conflict Over Creativity, Enterprise and Progress’ — the best book for rescuing the country from a ruinous itch for tidiness — is even more true now. Today’s primary political and cultural conflict is, Postrel says, between people, mislabeled ‘progressives,’ who crave social stasis, and those, paradoxically called conservatives, who welcome the perpetual churning of society by dynamism.”

–George F. Will, “The inexorable march of creative destruction,” The Washington Post, March 21, 2012

Money woes are clearly piling up around the globe. I learned via Twitter of the ongoing debate in Ireland over the “household tax,” which sounds similar to the U.S. property tax system. The economic woes in Ireland have led the country to impose a tax of roughly $133 per household. The New York Times reports that half of Irish homeowners refused to pay.

The biggest news in March, however, was the Supreme Court hearing on the Affordable Care Act. I found the Supreme Court testimony on all sides so incredibly beautifully argued. There was so much to think about and everyone was so excellently prepared. Truly, this was a law professor’s dream. It was also an excellent example of how people with very strong opinions can intelligently and respectfully have a productive conversation. Our Supreme Court justices earned every penny of their pay this week. Strangely, I put the audio on in the background and used it as motivation to do my own organizing. (Totally nerdy, I know.)

We are now (finally!) going to move on from money organizing. For me, it is time. While trying to organize my money mostly gives me a sense of control and confidence, this month’s discussion was the first time I found thinking about money a tad depressing. When I think too hard about retirement planning or paying down the national debt, I find it forces me to focus on my own mortality, which for a young person is just too overwhelming! But for 30 days out of each year, I force myself to take on all of these serious topics so that I can have full enjoyment of the rest of the year. I hope this month’s topics have caused you to do the same.

Please check back Friday when I will introduce a new organizing theme!

 Posted by on April 4, 2012 Monthly Recap Tagged with: , ,
Apr 022012

When I am learning about something new, I like to read broadly from a variety of opinions before forming my own. In my investor educational activities, I came across this offer from Newsmax to get a copy of a book called Aftershock for just the cost of shipping (about $5) plus 3 free 3-month subscriptions to their newsletters. (It looks like they have now changed the offer to cost $47, but refundable.) The advertising surrounding the book is pretty slick and definitely makes you fearful. The authors of Aftershock (David and Robert Wedemer and Cindy Spitzer) apparently gained a lot of credibility because their economic model predicted the fall of the housing market.

Note: Apparently there are 2 books out there that are both called Aftershock. (This is one of those interesting examples of one of the exceptions to copyright law that there is no copyright in book titles.) One is by former Secretary of Labor Robert Reich and is subtitled: “The Next Economy and America’s Future.” The one I purchased is by economist David Wiedemer, Robert Wiedemer and Cindy Spitzer and is subtitled: “Protect Yourself and Profit in the Next Global Financial Meltdown.”

So the book arrived and I put it on my bedside table. For weeks, it just sat there and it made me nervous to even think about it. Sometimes I would lie awake at night and worry about what would happen to us if there really was another economic event of the magnitude of the Great Depression. As the book continued to sit there, my nervousness went away and I kind of forgot about it. When this month’s Ruly theme came around, though, I set a goal for myself to actually read the book and figure out what, if anything I needed to do about it.

First – a 30-second summary of the book:

Pages 1 – 150 – a review of economic theory and factors driving our current economy, such as deficit spending, quantitative easing, etc. and the authors’ predictions and interpretations about what is likely to come as a result of this
Pages 153 – 230 – generalized investing and job advice about what to do to if the authors’ predictions are correct
Pages 231- 289 – the authors’ view of what is wrong with the economics profession and why we don’t get better economic predictions, the authors’ response to criticism about their work and an epilogue about factors influencing the markets

I won’t go into the authors’ specific investing recommendations since that is the reason why they want you to buy the book. I will say that my own take on them is that if you just skipped the first part of the book discussing economic theory and went right to the investing recommendations, you are probably going to take away an over-simplified view and you could end up making some very bad decisions. The authors pitch their financial consulting services in the book and for some of these strategies you probably don’t want to make them without getting some professional advice. Also, the authors recommend some strategies that are probably too risky for most of us. After all, you have to maintain your skepticism, pause and think, “What if I do all of this and the authors are wrong?”

So while there are some things in this book that I definitely won’t be doing, I have to say that the information has given me pause. Their argument is pretty convincing. In my dream world, we would hand a copy of this book to every member of Congress and lock them in the Capitol for a giant read-athon.

For example, based on the information from this book, I created the chart below of options to finance the U.S. government.

As you can see, we have pretty much taken off the table half of our options to avoid a crisis, simply because no one wants to give up anything. So we are proceeding with two other options that aren’t as helpful and possibly harmful. Real change, however, would likely mean that we balance the budget, pay down the debt, raise taxes AND cut benefits. Nobody gets any deals or special treatment. It is all just shared pain. You either pay more or get less. Nobody wants this, of course, but when you see what these authors model as the alternative, this stinginess sounds far better.

For example, here is another simple chart I made illustrating the authors’ points just on the impact of quantitative easing:

Since, unfortunately, it is unlikely that we can get everyone to agree to compromises on taxes or spending, we start heading down this economically destructive path.

There were many wonderful quotes from this book, including several on the psychology of wealth management:

“Change is threatening, inaction equals safety, and comfort comes from avoiding any changes that might threaten the benefits of the status quo. “

“The psychological advantage of [imagined Armageddon] is the opportunity to feel like passive victims in order to avoid the discomfort of having to make real decisions that bring about real change.”

“[P]lease don’t focus so much on your wallet that you forget what really makes life so worthwhile. . . [R]emember, the potential for happiness is actually always available to us because it comes, not from money or from things, but from other people. We need to remember this when money is flowing in our lives, and even more so when it is not.”

“Today, good judgment and taking risks are critical to making money and will be even more so in the future. In fact, good judgment and taking risks will be critical to simply holding onto your money in the future.”

“The combination of the demand to get . . . and the rewards of the good life . . . has been a one-two punch to creative . . . thought.” (referring to economists but I thought it should be edited to be applicable to us all!)

“[I]f your head says, ‘This book makes sense’ but your heart says, ‘I want my bubble back!’ then take a few deep breaths or have a few stiff drinks or take a nap but, whatever it takes, get over it and get on with your new life in the new economy.”

–David Wiedemer, Robert A. Wiedemer and Cindy Spitzer, excerpts from Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown

I’ll have to add this book to the growing list of professionals (Suze Orman and Peter Walsh among them) who are telling us that things have radically changed. We may be feeling a little of this change now but these professionals seem to be telling us that more is to come!

Perhaps it is time for that nap . . . .

I would encourage anyone to read this book, particularly if you feel like you have no idea what is going on in the world economy anymore. There is a lot of complexity there but this has been the best source I have seen so far at boiling it down to relatively simple explanations. Also, the authors make a good case that we are at a point in economic history that we have never really seen before and it is helpful to understand why.

While I certainly hope for intervening events that alter these authors’ predictions, this is an important book for all of us to be aware of.

How do you react to fearful economic news? Would you rather know what could be coming or just let it hit you by surprise? Please share in the comments.

Other than being a customer, I have no affiliation with Newsmax or the authors of Aftershock.

 Posted by on April 2, 2012 Ruly Bookshelf Tagged with: , ,
Mar 282012

At this time of the year, many people are focused a bit more heavily on their finances in order to pay their taxes. Not a pleasant task, to be sure. While you are deep in this focus, anyway, however, why not take just a few extra moments to check in on your 401(k)?

I struggle with managing my 401(k) just like everyone else. It is a huge responsibility and I am still not sure I am doing it “right.” Since this is all we have for our retirement, however, we keep trying each year to get better, learn something new and try something different to improve.

One investor mindset rule I have learned that applies especially to the 401(k) is:

Past performance does not guarantee future success but history is an excellent teacher.

We can’t predict what is going to happen in the stock market each year but we can at least start to recognize possible patterns for when certain types of investments do better than others or when certain types of investments do badly.

Two things I learned from 2011 about my 401(k):

1) The best investment category of 2011: Bonds. If I could turn back time and put my 401(k) investments into 2011’s best performing mutual funds, I would have put my entire portfolio in bonds at the end of 2010. If I had done this, we would have sat on a positive return of anywhere from 2-7%. Instead, our portfolio return got hammered by losses in stocks, especially international stocks, which declined up to 19%. Ouch! Of course, this year, the story is likely to be completely different and bonds may or may not be the right choice for 2012.

2) Dollar cost averaging does work! We have 3 separate 401(k)s to track from current and past employers. When I compared the investments in the different accounts, I was surprised to discover that two of the 401(k)s shared one investment in common. I cross-checked to see if the common mutual fund performed exactly the same in both 401(k)s. Interestingly, the answer was mostly yes but the only difference was that one of the 401(k)s was actively being contributed to and the other was not. The portfolio with the active contributions performed one full percentage point higher! You hear all the time that you should be consistently buying into your stocks, mutual funds, etc. constantly rather than trying to time the market. This was the first time I saw with my own money at stake, how this really does pay off. In my head, I guess I assumed that the hard part is just saving up enough money to be able to retire. This experience taught me that even if you can save up enough money, once you hit retirement, you can’t just sit on a pile of cash and draw it down. You need to continue to be reinvesting and saving even in your retirement years to keep your portfolio’s return as high as possible.

Attached is a form I prepared that mimics the analysis I just did on my own 401(k) based on my 8 Tips for Organizing Your 401(k) from last year. If you like, fill it out for your own 401(k), put it in a file folder near your taxes and each year, prepare an update to file and see how you are progressing.


If you need more detailed instructions about the form, below are the key steps I took to fill it out:

1) 2011 Overall Performance.  Go online to your 401(k) plan’s website to access your 401(k) plan statements for December 31, 2010 and December 31, 2011. Fill in the top blocks of the worksheet for the total balance of your 401(k) for 12/31/10 and 12/31/11 and the amount of money you and/or your employer contributed to the plan in 2011. (If you have more than one plan, repeat for your other plans.)

*Note: if you do nothing else, it is a good idea to make sure you double-check you got the correct employer match to your plan in 2011. If you don’t even know what the amount of the match should have been, send an email to your HR department to ask. From experience, sometimes employers have computer glitches or make mistakes. Double-check to make sure and if there is something wrong, let your HR department know.

2) 2011 Return.  Calculate your annual return using a calculator or spreadsheet, using the formula:

2011 return = ((2011 balance/(2010 balance+Self Contributions + Employer Contributions))-1) *100%

3) Brightscope Rating.  Look up the Brightscope rating for your plan at brightscope.com and fill that in the last block of the top table.

4) Performance of Individual Mutual Funds.  The middle section of the worksheet is optional, but helpful to determine how individual investments within your plan are performing. Again, all you generally need to do is look at your statements for 12/31/10 and 12/31/11. Most 401(k) plans will categorize these investments for you as “Stable Value,” “Bonds,” “Large Cap” etc. In the middle blocks put in the name of each fund and calculate the return for each fund using the 2010 beginning balance, 2011 contributions and 2011 balance, the same way as described above for the overall plan. In the last box you can also go to Morningstar.com and look up the Morningstar rating for each fund. The Morningstar rating system generally gives a star rating for how the fund has performed over the last several years and sometimes a rating such as gold, silver or bronze for how Morningstar thinks it will perform in the future. Interestingly, these ratings don’t correspond exactly to how our funds performed but they are at least one objective guideline to take into consideration. Also, as Ramit Sethi notes in his book, underperforming funds often get closed down and transferred to new funds at the end of each year. You might want to note how many of your funds did this.

5) Look at the Long View.  The Retirement Goal Status box asks you to make a goal for how much you would like to live on (in today’s dollars) at retirement each year and how many years you estimate you will be in retirement. Plug these numbers into a calculator such as this one  to determine how much total money you will need by the time you retire. It will be a huge number but don’t be afraid of it, just write it down. Use the same calculator to figure out how much you will need to save each month to hit your target. Calculate one number using a generous return of 8% and another using a lesser return of about 5%.

6) 2012 Contributions.  Then write down how much you estimate you will actually contribute to your 401(k) based on your current paycheck deductions and your 2012 estimated employer match. If your number is nowhere near what the calculator indicates you will need to save this year, try not to panic. Understand that retirement saving is a long-term game. If you can’t hit your savings target this year, you just need to tack it in the back of your mind that you will have to put aside even more in the future to make up for it or adjust your eventual goal downward.

7) Loan and Hardship Withdrawals.  Finally, in the last box, it is a good idea to check in to see what the loan and hardship withdrawal provisions are for your 401(k) just in case you should ever have to withdraw the money for an emergency. It is almost always a bad idea to have to take a loan or withdrawal from your 401(k) but if you are truly desperate, it is a resource available to you. The loan and withdrawal provisions are generally available online in the same place you access your 401(k) balance and other data.

I know this is a lot and overwhelming to some. If it is too much for you, perhaps do just the top box and set it aside. Or print out the form, print out your 12/30/2011 401(k) statement, put them in a file folder and make a note to do it next year.

How do you keep track of your 401(k)? Please share in the comments.

 Posted by on March 28, 2012 General Tagged with: , ,