31% cumulative
31% cumulative
This morning I was looking at my wifes old 401k (she's no longer working, to stay home and raise our son) and noticed the company who holds the 401k shows her return as a "cumulative rate" of 31.79%.
I'm assuming this is just adding each month's return which totals the 31.79%? If so that means she's earning less then 3% each month on her 401k. If that's the case then I'm going to think we need to look at what is being invested and change it or maybe even rollover her 401k to an IRA with Vanguard and re-invest there!?!
Am I thinking this wrong or is 31.79 cumulative actually really good?
Thanks!
I'm assuming this is just adding each month's return which totals the 31.79%? If so that means she's earning less then 3% each month on her 401k. If that's the case then I'm going to think we need to look at what is being invested and change it or maybe even rollover her 401k to an IRA with Vanguard and re-invest there!?!
Am I thinking this wrong or is 31.79 cumulative actually really good?
Thanks!
Re: 31% cumulative
You need to compare to a benchmark. 32% could be good or it could be bad.
Here are some benchmarks for the past 12 months:
https://personal.vanguard.com/us/funds/ ... arkreturns
It seems that 20% to 41% was pretty normal, so 32% is about average, but below what the Total US Stock Market Index fund did in 2013.
Here are some benchmarks for the past 12 months:
https://personal.vanguard.com/us/funds/ ... arkreturns
It seems that 20% to 41% was pretty normal, so 32% is about average, but below what the Total US Stock Market Index fund did in 2013.
Re: 31% cumulative
I think you have it a little backwards. How are the funds invested? What is your expected return? What is the ER? How did the investment compare to a relevant benchmark?
Rolling it to an IRA might have unintended consequences, like hampering your ability to do a backdoor Roth.
L.
Rolling it to an IRA might have unintended consequences, like hampering your ability to do a backdoor Roth.
L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")
- bogleblitz
- Posts: 506
- Joined: Mon Oct 01, 2012 2:51 pm
Re: 31% cumulative
31% for 1 year is very good year. If you had 1 million, you now have 1.31 million.
32% was the stocks S&P benchmark earn in 2013, so you are probably 100% all equity stocks.
No need to rollover to any IRA.
32% was the stocks S&P benchmark earn in 2013, so you are probably 100% all equity stocks.
No need to rollover to any IRA.
Re: 31% cumulative
Umm.. why is this bad? Later year the market went up about 30%, and her 401k shows that her 401k went up about 30% last year.
I don't understand the problem. You do realize that 3% a month is really really good right?
I don't understand the problem. You do realize that 3% a month is really really good right?
- jimb_fromATL
- Posts: 2278
- Joined: Sun Nov 10, 2013 11:00 am
- Location: Atlanta area & Piedmont Triad NC and Interstate 85 in between.
Re: 31% cumulative
Do you have the figures for the start and end of 2013?
How is it invested?
That would be in the ballpark for the increase in a broad all equities fund like the S&P 500 or a total market fund. For comparison Vanguard's S&P 500 index fund VFINX had an increase of 32.18% for 2013. Vanguard's total market index fund VTI did a little over 33%.
jimb
How is it invested?
That would be in the ballpark for the increase in a broad all equities fund like the S&P 500 or a total market fund. For comparison Vanguard's S&P 500 index fund VFINX had an increase of 32.18% for 2013. Vanguard's total market index fund VTI did a little over 33%.
jimb
Re: 31% cumulative
Only here would someone complain about 3% per month.
And it's closer to 2% monthly.
And it's closer to 2% monthly.
Re: 31% cumulative
Wait, back up. What do you think she should be earning per month?
Re: 31% cumulative
Does this also include contributions? Many retirement plans love to show a total increase over time, including adding additional principal, which leads to some really misleading "rate of returns".
Re: 31% cumulative
She is no longer working.happymob wrote:Does this also include contributions? Many retirement plans love to show a total increase over time, including adding additional principal, which leads to some really misleading "rate of returns".
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
Re: 31% cumulative
+1Bacchus01 wrote:Only here would someone complain about 3% per month.
And it's closer to 2% monthly.