My wife for the first time in her life, has a retirement plan at the place she works for.  She’s pretty excited about it and I can’t blame her.  She’s got a hell of a deal.  100% vested after 3 years.

Any how as I was researching her investment options I was having a hell of a time finding any symbols for the accounts she was allowed to invest in. So I took a good stab at it an got her going. But it still bothered me. Finally after some time she got online access to her 401K account and I was able to look at stuff.  Long story short she’s not invest in mutual funds, but in seperate accounts (SEP) which are sort of like mutual funds.   I’m not sure why seperate accounts are used but it’s been suggested to me that the higher fees can be charged using seperate accounts.  True or not I don’t know.

After poking around the site of the 401K provider I couldn’t find some things that I needed (prices!). So yesterday I get on the phone with the guy at her work who is kind of the leader of the retirement stuff.  We got to talking and through our conversation he mentioned that he bought and held stuff and didn’t really pay attention to the prices that much. I didn’t say much to that, but I know where he’s at.  I used to buy and hold and you want to know where it got me??? NOWHERE.  I ended up negative with buying and holding.

Here’s something for you to consider.  If your account is down 12% for the year, it’s going to take 13.6% to get back to even (as things go further south…it’s going to take even more to get back to even). I should also mention that the broad market that most mutual funds follow (S&P 500), this year are down about 12%.  Some areas are down less but the majority are down 12% so far.  I could give an example of my former work 401K (down 17.8% from when I cashed it out; I’d have to gain 21.6% to be back to even!), but I’ll spare you those boring details.  So what should someone do?  Well having a strategy is one thing.  I’ll touch more on this a bit later (perhaps tomorrow).

I am not an investment professional or money manager so what I say here is really what I’ve learned through reading various different books that could be picked up at Amazon.