My friend says his Roth and 401k are higher than before the pandemic started

mentos · Post by **mentos** » Wed Apr 15, 2020 12:17 pm

My friend said his Roth IRA and 401k balances are higher than before this pandemic started. I am wondering how this can be? My accounts are down about 25-30% since the high in February. Back then the DOW was 29,500 and it's currently around 23,400 so that sounds about right. But he says the S&P is a better index to go by. We both have all index funds. Did I just do a bad job of choosing funds?

Jack FFR1846 · Post by **Jack FFR1846** » Wed Apr 15, 2020 12:21 pm

AA and potentially rebalance activity. I'm 50/50 with some US Savings Bonds thrown in. I'm currently (as of this moment) down 7.14%. If he has more bonds and/or stable value fund, then he could certainly be up. There have been 401k contributions since the pandemic started and at least for me, my tax return was completed, allowing me and my wife to contribute $14k total to our Roths. So although they're all total US Stock, they may very well have more in them now than before February.

bloom2708 · Post by **bloom2708** » Wed Apr 15, 2020 12:22 pm

If he has a smaller balance but it now adding a larger amount 2 times per month it could be true. Saving more grows the balance quite fast.

It is unlikely his return is positive. My 401k was at -5.89% before today YTD.

He could have sold in Feb and bought back in at the right time and be up.

I wouldn't worry about it too much. I think most people with a mix of stocks/bonds who bought/held are down somewhere between 5-10%. Again, before today's drop.

livesoft · Post by **livesoft** » Wed Apr 15, 2020 12:24 pm

It can be pretty easy:

1. Start with $5000 in Roth and 401(k).
2. Make 2019 Roth contribution on March 16th.
3. Make 2020 Roth contribution on March 19th, too.
4. Get 2019 company match in late March 2020.
5. ....

-or-

1. Be all in index funds such as a bond index fund.

-or-

In my case, I did a rollover of an HSA started in early February and completed on March 16th, so my HSA is up 10% for its 60/40 asset allocation.

-or-

Something else, ....

Stinky · Post by **Stinky** » Wed Apr 15, 2020 12:25 pm

How long has he been investing in his Roth and 401(k)?

If it's just been a short period of time, and if he's been contributing new money, it's entirely possible that the new contributions are greater than the decline in value on existing funds.

KingRiggs · Post by **KingRiggs** » Wed Apr 15, 2020 12:31 pm

Friends don't compare portfolio sizes...unless they're REALLY good friends...

steadtler · Post by **steadtler** » Wed Apr 15, 2020 12:40 pm

Easy. His balance was low and he makes regular contributions. Both of mine are higher too. But that's because I decided to max the Roth IRA early this year and my 401k balance was low to begin with. My traditional IRA/401k rollover account is still down significantly.

RCL · Post by **RCL** » Wed Apr 15, 2020 12:51 pm

"Before the pandemic started".....
All depends of when he picked his time period in making his comparison in addition to the content of his Roth & 401k.
IMHO, I don't understand why people would use the previous high point or low point as a comparison point.
Seems doing so just exaggerates the results, causing either euphoria or despair.
Personally, I use the same time period for my comparisons, (the last trading day of the prior year). This follows what is used in the determination of my yearly RMD's. Easy-Peasy.

As mentioned in earlier posts, content of the container makes a huge difference.
Prior to today, both my IRA & 401k are positive for the year (fixed income based).

Could I make almost the same statement?...No...
my Roth (equity based) and DW's IRA (also mostly equity based), are negative for the year

Xrayman69 · Post by **Xrayman69** » Wed Apr 15, 2020 1:15 pm

All cash or money market with monthly interest payments. ......

mentos · Post by **mentos** » Wed Apr 15, 2020 1:36 pm

I rebalanced my Roth in February:
SCHA 585 shares (currently $53.75/share) Cost Basis $76.80/share
SCHM 320 shares (currently $44.49/share) Cost Basis $61.87/share

Currently down 29.42%.

Did I just have really bad timing? I'm sure it won't matter in 30 years from now, or even next year when I put in another $6,000.

Tamarind · Post by **Tamarind** » Wed Apr 15, 2020 1:40 pm

My wife's 401k is higher than it was on 2/20. She contributes the max allowed per paycheck and maxes it out early in the year. Also she holds more bonds than I do so it didn't drop as much.

Your friend's performance doesn't really tell you anything about your own.

You should be comparing your performance to your benchmark for your particular asset allocation.

Triple digit golfer · Post by **Triple digit golfer** » Wed Apr 15, 2020 1:41 pm

Key question: when does he consider the pandemic to have started?

RCL · Post by **RCL** » Wed Apr 15, 2020 1:46 pm

+1 See first paragraph of my earlier post

Triple digit golfer · Post by **Triple digit golfer** » Wed Apr 15, 2020 1:52 pm

RCL wrote: ↑Wed Apr 15, 2020 1:46 pm +1 See first paragraph of my earlier post

mentos · Post by **mentos** » Wed Apr 15, 2020 3:04 pm

Triple digit golfer wrote: ↑Wed Apr 15, 2020 1:41 pm Key question: when does he consider the pandemic to have started?

Since the stock market selloff began.

mptfan · Post by **mptfan** » Wed Apr 15, 2020 3:10 pm

bloom2708 wrote: ↑Wed Apr 15, 2020 12:22 pm If he has a smaller balance but it now adding a larger amount 2 times per month it could be true. Saving more grows the balance quite fast.

This.

megabad · Post by **megabad** » Wed Apr 15, 2020 3:11 pm

livesoft wrote: ↑Wed Apr 15, 2020 12:24 pm Blah blah market timing blah blah

This. Probably. Or Pinnochhio is growing his nose...

White Coat Investor · Post by **White Coat Investor** » Wed Apr 15, 2020 3:15 pm

mentos wrote: ↑Wed Apr 15, 2020 12:17 pm My friend said his Roth IRA and 401k balances are higher than before this pandemic started. I am wondering how this can be? My accounts are down about 25-30% since the high in February. Back then the DOW was 29,500 and it's currently around 23,400 so that sounds about right. But he says the S&P is a better index to go by. We both have all index funds. Did I just do a bad job of choosing funds?

I'm not down all that much money from this downturn, but that's mostly a function of new contributions.

I don't know what you did wrong to be down 25-30% while the market is down 20% though. Must be some very unfortunate timing of contributions or something.

White Coat Investor · Post by **White Coat Investor** » Wed Apr 15, 2020 3:16 pm

bloom2708 wrote: ↑Wed Apr 15, 2020 12:22 pm If he has a smaller balance but it now adding a larger amount 2 times per month it could be true. Saving more grows the balance quite fast.

It is unlikely his return is positive. My 401k was at -5.89% before today YTD.

He could have sold in Feb and bought back in at the right time and be up.

I wouldn't worry about it too much. I think most people with a mix of stocks/bonds who bought/held are down somewhere between 5-10%. Again, before today's drop.

I would say 10-20% would be more accurate. My parents portfolio which is 50/50 is down 9.2% YTD, more from the February high. I'm closer to 20% on an XIRR basis.

dukeblue219 · Post by **dukeblue219** » Wed Apr 15, 2020 3:21 pm

To address one other point, the Dow and S&P500 track reasonably well over any lengthy time period (even weeks). Yes, the Dow is a stupid way to track the market but we can get away with it even in 2020 because it isn't THAT different in results.

Artsdoctor · Post by **Artsdoctor** » Wed Apr 15, 2020 3:33 pm

Easy: bonds.

I have tax-advantaged accounts to which I've added nothing in years and they're up about 7% or so this year. I don't have any equities in those accounts and they only contain TIPS with a smattering of nominal bonds and CDs. This has nothing to do with market timing or anything, but I prefer to hold TIPS in tax-advantaged accounts and they've had a good year (so far).

If he's only talking about equity funds, then it's all a matter of when new shares were purchased.

Dominic · Post by **Dominic** » Wed Apr 15, 2020 3:35 pm

Someone with a very high allocation to Treasuries (preferably as long duration as possible) who rebalanced before the ~20% bounce could conceivably be up. Bonus points if their equities were tilted away from value (e.g. they own a growth or tech fund), because those stocks didn't get hit quite as hard. Even more bonus points for a small starting balance, where a few months of contributions would help immensely.

sergeant · Post by **sergeant** » Wed Apr 15, 2020 5:31 pm

My friend says he never loses when he gambles in Las Vegas. Some people never admit a loss or bad decision. That same friend that never loses in Vegas has moved and purchased homes in 7 distinct areas over the last 10 years. Each time he settles in he says it's heaven and he's never leaving. A year or so goes by and he announces he's moving again. Of course, he has made money on every single move!

Is it possible your friend is like my friend?

ram · Post by **ram** » Wed Apr 15, 2020 6:26 pm

One of my retirement accounts is 100% Intermediate term treasurys. No contributions or withdrawals since Jan 1 of this year. Up 7% YTD. This is a non governmental (at risk) 457B account and the plan was to keep something with the lowest return in this account. YTD it has been exactly opposite.

Taxable Ac which is 100% stocks is substantially down. Total is -16% YTD.

AlphaLess · Post by **AlphaLess** » Wed Apr 15, 2020 6:28 pm

mentos wrote: ↑Wed Apr 15, 2020 12:17 pm My friend said his Roth IRA and 401k balances are higher than before this pandemic started. I am wondering how this can be? My accounts are down about 25-30% since the high in February. Back then the DOW was 29,500 and it's currently around 23,400 so that sounds about right. But he says the S&P is a better index to go by. We both have all index funds. Did I just do a bad job of choosing funds?

Yesterday, one of our accounts was at 96% of the Feb 20th balance.

That account was at ~45% stock; and I took it to ~60% stock around the bottom.

Over all our accounts, yesterday, we were at 92.5% of the Feb 20th balance.

Can't complain.
Even at the bottom, we were at 84%.

tesuzuki2002 · Post by **tesuzuki2002** » Wed Apr 15, 2020 8:26 pm

mentos wrote: ↑Wed Apr 15, 2020 12:17 pm My friend said his Roth IRA and 401k balances are higher than before this pandemic started. I am wondering how this can be? My accounts are down about 25-30% since the high in February. Back then the DOW was 29,500 and it's currently around 23,400 so that sounds about right. But he says the S&P is a better index to go by. We both have all index funds. Did I just do a bad job of choosing funds?

Not necessarily bad funds... could be timing to... The market dipped good and already bounced up... if you or he mad some purchased down at the local bottom he could be above his previous highs.. My contributions are trumped by my portfolio so adding a few thousand here and there is a wash in the weeds for me... On the other hand... a small portfolio might see a big injection from a few thousand... so it's all relative...

I'm down a total of 9% YTD... Not great but it was much worse... I made some big money moved the week of March 20 and made out with a little luck to bring the numbers back up... I think we are going lower... ignore that noise and keep buying as we go down...

Katietsu · Post by **Katietsu** » Wed Apr 15, 2020 9:19 pm

mentos wrote: ↑Wed Apr 15, 2020 3:04 pm
Triple digit golfer wrote: ↑Wed Apr 15, 2020 1:41 pm Key question: when does he consider the pandemic to have started?
Since the stock market selloff began.

Is this your definition or his? Maybe he is looking at his end of year balance vs now. Mine is not much different. If I compare today to the highest peak, it looks a lot worse.

But, you do have a tilt to small that has done worse than large and apparently all equities that are not being balanced with cash or bonds. So, you would be down more than someone who had say a moderate portfolio of 60% in VTI and 40% in BND.

mentos · Post by **mentos** » Wed Apr 15, 2020 10:01 pm

mentos wrote: ↑Wed Apr 15, 2020 1:36 pm I rebalanced my Roth in February:
SCHA 585 shares (currently $53.75/share) Cost Basis $76.80/share
SCHM 320 shares (currently $44.49/share) Cost Basis $61.87/share

Currently down 29.42%.

Did I just have really bad timing? I'm sure it won't matter in 30 years from now, or even next year when I put in another $6,000.

I was wondering if anyone had any comment on my funds? I don't know how I'm down so much when everyone is only down a little or up.

jharkin · Post by **jharkin** » Thu Apr 16, 2020 7:43 am

White Coat Investor wrote: ↑Wed Apr 15, 2020 3:15 pm
mentos wrote: ↑Wed Apr 15, 2020 12:17 pm My friend said his Roth IRA and 401k balances are higher than before this pandemic started. I am wondering how this can be? My accounts are down about 25-30% since the high in February. Back then the DOW was 29,500 and it's currently around 23,400 so that sounds about right. But he says the S&P is a better index to go by. We both have all index funds. Did I just do a bad job of choosing funds?
I'm not down all that much money from this downturn, but that's mostly a function of new contributions.

I don't know what you did wrong to be down 25-30% while the market is down 20% though. Must be some very unfortunate timing of contributions or something.

^^ This.

Overall I'm only down around 15% right now.... markets have bounced back a lot. My 401k in particular is down less than 10% as that's where I keep all my bond allocation and it gets the largest new contributions.

Our Roths took more of a beating as its 100% stock and I lump sum in once a year when I do my taxes (have to calculate each time if I'm close to back door).

OP: It would be easy for your friend to be UP if s/he was all or mostly Bonds/Treasuries/Tbills/CD/etc and is contributing new money every week.

jharkin · Post by **jharkin** » Thu Apr 16, 2020 7:48 am

mentos wrote: ↑Wed Apr 15, 2020 10:01 pm
mentos wrote: ↑Wed Apr 15, 2020 1:36 pm I rebalanced my Roth in February:
SCHA 585 shares (currently $53.75/share) Cost Basis $76.80/share
SCHM 320 shares (currently $44.49/share) Cost Basis $61.87/share

Currently down 29.42%.

Did I just have really bad timing? I'm sure it won't matter in 30 years from now, or even next year when I put in another $6,000.
I was wondering if anyone had any comment on my funds? I don't know how I'm down so much when everyone is only down a little or up.

You are concentrated in small/mid caps. Most of us are broadly diversified in total market.

LuckBeALady · Post by **LuckBeALady** » Thu Apr 16, 2020 7:58 am

sergeant wrote: ↑Wed Apr 15, 2020 5:31 pm My friend says he never loses when he gambles in Las Vegas.

My family members who gsmble seem to think they never lose money.

Then where does the money come for all those huge buildings? The casino owners must be really generous people.

I hate to say it, but I think people sometimes get confused about how well they are doing with their money. Witness spending your tax return or raise two or three times over.

tealeaves · Post by **tealeaves** » Thu Apr 16, 2020 8:07 am

All my balances (not just 401k and IRA) are higher than 3 years before the pandemic started.

meowcat · Post by **meowcat** » Thu Apr 16, 2020 8:44 am

You didn't miss out on anything. Comparing balances is irrelevant, you must compare total return over the same period.

MotoTrojan · Post by **MotoTrojan** » Thu Apr 16, 2020 8:47 am

jharkin wrote: ↑Thu Apr 16, 2020 7:48 am
mentos wrote: ↑Wed Apr 15, 2020 10:01 pm
mentos wrote: ↑Wed Apr 15, 2020 1:36 pm I rebalanced my Roth in February:
SCHA 585 shares (currently $53.75/share) Cost Basis $76.80/share
SCHM 320 shares (currently $44.49/share) Cost Basis $61.87/share

Currently down 29.42%.

Did I just have really bad timing? I'm sure it won't matter in 30 years from now, or even next year when I put in another $6,000.
I was wondering if anyone had any comment on my funds? I don't know how I'm down so much when everyone is only down a little or up.
You are concentrated in small/mid caps. Most of us are broadly diversified in total market.

+1, bold overall AA. If you zoom out to 2018 you are down a good bit more than just the relative drawdowns since February.

I tilt to small as well globally but not 100% like this.

whodidntante · Post by **whodidntante** » Thu Apr 16, 2020 8:58 am

Sometimes people see what they want to see. It's also possible that it's true. In my opinion you should not judge a portfolio based solely on the performance for the last n months. Instead make sure you are taking good risks with your money and that you're not taking too much or too little risk.

ruralavalon · Post by **ruralavalon** » Thu Apr 16, 2020 10:54 am

mentos wrote: ↑Wed Apr 15, 2020 12:17 pm My friend said his Roth IRA and 401k balances are higher than before this pandemic started. I am wondering how this can be? My accounts are down about 25-30% since the high in February. Back then the DOW was 29,500 and it's currently around 23,400 so that sounds about right. But he says the S&P is a better index to go by. We both have all index funds. Did I just do a bad job of choosing funds?

Total return (including reinvestment of dividends) of our portfolio is down 6.88% year to date, but our best fund (Vanguard Intermediate-term Bond Index Fund, VBILX) is up 5.16% year to date. Our asset allocation is 50/50.

Your friend could have a large bond allocation. Your friend could be including all his contributions in describing account size ("his Roth IRA and 401k balances"), and may not even be talking about returns.

Slapshot · Post by **Slapshot** » Thu Apr 16, 2020 11:25 am

I'm retired so I don't contribute to my IRA any more. Plus I have my RMD taken out quarterly. Right now I have more in my account than ever, even with the RMDs taken out for the past 2 years. I have 4 funds: TBM, GNMA, TIPS and Wellesley.

Phineas J. Whoopee · Post by **Phineas J. Whoopee** » Thu Apr 16, 2020 2:32 pm

It depends on what's held and how much is contributed relative to the previous value, and rebalancing activity, and given the recent wild volatility which day each investment is bought and which other day it's marked to market. The value today could be higher than on some other day.

I'm not suggesting your friend is a liar. My friend, at a public gathering, told the table his S&P 500 index fund was up during an interval over which the index had very considerably fallen. I challenged but allowed myself to be shut down.

It turned out he was deliberately lying to his (now ex) wife. He didn't expect to fool me.

PJW

illumination · Post by **illumination** » Thu Apr 16, 2020 3:02 pm

People lie like crazy about their investment prowess. Wall Street is basically built on this premise.

It's amazing how many people came out of the woodwork here and stated they sold everything and went cash because thy knew Corona was a very big deal. Maybe it's true, maybe it's not, but I would bet the same people that did something like that have an absolutely terrible rate of return and "cash out" every time they watch CNBC and get the jitters.

capjak · Post by **capjak** » Thu Apr 16, 2020 3:07 pm

BND is up 5% YTD and was up 8.8% in 2019. so yea

deltaneutral83 · Post by **deltaneutral83** » Thu Apr 16, 2020 3:14 pm

OP, did this same friend extol the virtues of dividends signaling he thinks they are a free lunch?

PaleoWorx · Post by **PaleoWorx** » Thu Apr 16, 2020 3:30 pm

mentos wrote: ↑Wed Apr 15, 2020 12:17 pm My friend said his Roth IRA and 401k balances are higher than before this pandemic started. I am wondering how this can be? My accounts are down about 25-30% since the high in February. Back then the DOW was 29,500 and it's currently around 23,400 so that sounds about right. But he says the S&P is a better index to go by. We both have all index funds. Did I just do a bad job of choosing funds?

My 99-year old neighbor says he can satisfy four women on a single day, any day. So the 85-year old neighbor got upset cause for the last 20 years satisfying one woman in a week seems like a fiction for him. So I told him "why can't you SAY the same thing? No one would know the truth anyway"
Get it?

DesertDiva · Post by **DesertDiva** » Thu Apr 16, 2020 3:44 pm

Stinky wrote: ↑Wed Apr 15, 2020 12:25 pm How long has he been investing in his Roth and 401(k)?

If it's just been a short period of time, and if he's been contributing new money, it's entirely possible that the new contributions are greater than the decline in value on existing funds.

^^^ This ^^^
Ignore the noise and keep your business confidential.

Katietsu · Post by **Katietsu** » Thu Apr 16, 2020 11:58 pm

jharkin wrote: ↑Thu Apr 16, 2020 7:48 am
mentos wrote: ↑Wed Apr 15, 2020 10:01 pm
mentos wrote: ↑Wed Apr 15, 2020 1:36 pm I rebalanced my Roth in February:
SCHA 585 shares (currently $53.75/share) Cost Basis $76.80/share
SCHM 320 shares (currently $44.49/share) Cost Basis $61.87/share

Currently down 29.42%.

Did I just have really bad timing? I'm sure it won't matter in 30 years from now, or even next year when I put in another $6,000.
I was wondering if anyone had any comment on my funds? I don't know how I'm down so much when everyone is only down a little or up.
You are concentrated in small/mid caps. Most of us are broadly diversified in total market.

This. Is your Roth allocation balanced out elsewhere in your portfolio?

2020 ButClassic · Post by **2020 ButClassic** » Fri Apr 17, 2020 12:45 am

Your friend could have done better than others in a given slice of time. He had a conservative portfolio?

Did he also do better in the last 12 months? How about the last 3 years? Or 5 years?

Probably not unless he was a super active investor. And significantly luckier than 95% of his peers while shuffling his portfolio.

celia · Post by **celia** » Fri Apr 17, 2020 5:12 am

mentos wrote: ↑Wed Apr 15, 2020 12:17 pm My friend said his Roth IRA and 401k balances are higher than before this pandemic started. I am wondering how this can be?

He could have done Roth conversions and his employer could have just added their match to the 401K.

Now the real question is, has he finished his 2019 tax return?

bdpb · Post by **bdpb** » Fri Apr 17, 2020 9:09 am

mentos wrote: ↑Wed Apr 15, 2020 12:17 pm My friend said his Roth IRA and 401k balances are higher than before this pandemic started. I am wondering how this can be? My accounts are down about 25-30% since the high in February. Back then the DOW was 29,500 and it's currently around 23,400 so that sounds about right. But he says the S&P is a better index to go by. We both have all index funds. Did I just do a bad job of choosing funds?

Did you ask him how those accounts are higher? Does he know why?

Maybe he thinks the pandemic started when the stock market was at its low.

Maybe those accounts are all bonds and his stocks are in taxable accounts.

aristotelian · Post by **aristotelian** » Fri Apr 17, 2020 11:23 am

What is he invested in? Sometimes new investors think their 401k is a fund and end up investing in cash for years before they figure out that it is an account with various fund options. Or he may be in something conservative and come out ahead with new contributions.

mentos · Post by **mentos** » Sat Apr 18, 2020 10:08 pm

Katietsu wrote: ↑Thu Apr 16, 2020 11:58 pm
jharkin wrote: ↑Thu Apr 16, 2020 7:48 am
mentos wrote: ↑Wed Apr 15, 2020 10:01 pm
mentos wrote: ↑Wed Apr 15, 2020 1:36 pm I rebalanced my Roth in February:
SCHA 585 shares (currently $53.75/share) Cost Basis $76.80/share
SCHM 320 shares (currently $44.49/share) Cost Basis $61.87/share

Currently down 29.42%.

Did I just have really bad timing? I'm sure it won't matter in 30 years from now, or even next year when I put in another $6,000.
I was wondering if anyone had any comment on my funds? I don't know how I'm down so much when everyone is only down a little or up.
You are concentrated in small/mid caps. Most of us are broadly diversified in total market.
This. Is your Roth allocation balanced out elsewhere in your portfolio?

Thanks, I didn't realize small caps and mid caps have not recovered like large caps have.

My current 401k has small caps, mid caps, large caps and international and is down about 10% but that includes new contributions and matching every 2 weeks. My old 401k that I no longer contribute to is down about 20%.

I made a post back in Feb about my asset allocation, it's a bit cumbersome:
viewtopic.php?t=304409

Sadly, I rebalanced at the worst time possible. Maybe I should have put everything into a total stock market fund and called it a day.

Poorman · Post by **Poorman** » Sun Apr 19, 2020 6:46 am

Why don't you ask him...