401k dilemmas

[Slapper]

Hi all.

Gotta tell you my personal story about my experience in the financial market and my retirement fund. To make a long story short... here are the specs: Been contributing to the fund, maxing out for my wife and I, about 10 years through a financial adviser. We've invested in about 6-7 funds and 3-4 individual stocks, 2 of which went bankrupt and 4 out of the remaining 5 are still "in the red", while the only two that I've been able to break even on are the stocks I personally made the decision to buy (not the financial adviser).

All in all this financial "adviser" (more like thief if you ask me) has lost > 35% (close to 150k) of all the money we've put into the funds during these past 10 years. In the case of the funds that went bankrupt we couldn't get a single dollar back because when you invest in a fund that invests in shares you don't actually phisically hold the shares, you hold "units"; which is fine... until the company goes belly up and files for bankruptcy, because when liquidating assets shares take precedence to units (bonds > preferred > ordinaries > units) so you are lucky if you get 5% back of what you lost.

Thankfully I did move about 85% of the moneys out of these two funds, going against what this adviser was telling me to do, before they went belly up (thanks in part to the 401k thread here and the constant negativity, which turned out to be reality), but this was MY decision. This guy either did not see the mortgage debacle coming or he chose not to tell me. Come to think of it, he missed many of the mini-bubbles like the oil bubble, et cetera. And he works for one of the major financial firms in the industry!

Anyways, the two stocks I decided to buy myself, again, going against this guy's advise, was Citi, which I bought in December (small lot) at $ 5.26 and then again in later February (large lot) at about $1.20; and Enerplus, which I bought at $ 13.98 in late March and has since almost doubled and pays NIIIICE dividends. These two stocks, which I am in no way touting by the way, I was adamantly advised NOT TO BUY by this guy. It was my decision nonetheless. Goes to show you that many financial advisers are simply ill-equipped to advise anyone about buying anything, let alone stocks.

The straw that broke the camel's back took place about 3 months ago. While talking to a mortgage broker friend of mine, talk about refinancing my mortgage came up and he told me to "stay attentive". Since I was holding a 7.35% loan... let's say I was more than interested in lowering the rate. Lo and behold I stumbled upon a rate in the 4% range (with points) and I jumped on it right away. Loan got accepted and I decided to pay for the closing costs with a loan against my 401k plan (which at that point was up 2-3% thanks to Citigroup and Enerplus Resources) so that I could lock in the gain and pay myself a nice 5.25% per year (albeit no compounding), all the while saving a nice $ 600.00 per month.

And you know what this guy had to say? "Nooooooooo!! What have you done!! That is the worst decision I've heard of in my life!! Might as well wash your 401k down the drain!!".

This is the same guy who lost my family $140,000 in 8½ years of disservice (a staggering -5% per year). This is the caliber of "advisers" abundant throughout Wall Street nowadays. If I could give ANY advise to ANYONE about to go into a similar situation it would be to ask your adviser a simple question: Is it ever a good time to liquidate a 401k and invest in something else other than the stock or any other market? If he/she says no, shake his/her hand, thank him/her and walk out. The correct answer is: Yes, the option of liquidating a 401k should ALWAYS be an option. Especially when the fund is dissappearing in front of your very eyes.

Have any of you had a similar experience?

[sync pulse]

No I haven't, my employer at the time 20 years ago advised me to go with Fidelity Magellan and the Fidelity group of funds in general.  No bankruptcies.  My heavens, my heart goes out to you.  I guess I have been very lucky.

[Decker]

Hi all.

Gotta tell you my personal story about my experience in the financial market and my retirement fund. To make a long story short... here are the specs: Been contributing to the fund, maxing out for my wife and I, about 10 years through a financial adviser. We've invested in about 6-7 funds and 3-4 individual stocks, 2 of which went bankrupt and 4 out of the remaining 5 are still "in the red", while the only two that I've been able to break even on are the stocks I personally made the decision to buy (not the financial adviser).

All in all this financial "adviser" (more like thief if you ask me) has lost > 35% (close to 150k) of all the money we've put into the funds during these past 10 years. In the case of the funds that went bankrupt we couldn't get a single dollar back because when you invest in a fund that invests in shares you don't actually phisically hold the shares, you hold "units"; which is fine... until the company goes belly up and files for bankruptcy, because when liquidating assets shares take precedence to units (bonds > preferred > ordinaries > units) so you are lucky if you get 5% back of what you lost.

Thankfully I did move about 85% of the moneys out of these two funds, going against what this adviser was telling me to do, before they went belly up (thanks in part to the 401k thread here and the constant negativity, which turned out to be reality), but this was MY decision. This guy either did not see the mortgage debacle coming or he chose not to tell me. Come to think of it, he missed many of the mini-bubbles like the oil bubble, et cetera. And he works for one of the major financial firms in the industry!

Anyways, the two stocks I decided to buy myself, again, going against this guy's advise, was Citi, which I bought in December (small lot) at $ 5.26 and then again in later February (large lot) at about $1.20; and Enerplus, which I bought at $ 13.98 in late March and has since almost doubled and pays NIIIICE dividends. These two stocks, which I am in no way touting by the way, I was adamantly advised NOT TO BUY by this guy. It was my decision nonetheless. Goes to show you that many financial advisers are simply ill-equipped to advise anyone about buying anything, let alone stocks.

The straw that broke the camel's back took place about 3 months ago. While talking to a mortgage broker friend of mine, talk about refinancing my mortgage came up and he told me to "stay attentive". Since I was holding a 7.35% loan... let's say I was more than interested in lowering the rate. Lo and behold I stumbled upon a rate in the 4% range (with points) and I jumped on it right away. Loan got accepted and I decided to pay for the closing costs with a loan against my 401k plan (which at that point was up 2-3% thanks to Citigroup and Enerplus Resources) so that I could lock in the gain and pay myself a nice 5.25% per year (albeit no compounding), all the while saving a nice $ 600.00 per month.

And you know what this guy had to say? "Nooooooooo!! What have you done!! That is the worst decision I've heard of in my life!! Might as well wash your 401k down the drain!!".

This is the same guy who lost my family $140,000 in 8½ years of disservice (a staggering -5% per year). This is the caliber of "advisers" abundant throughout Wall Street nowadays. If I could give ANY advise to ANYONE about to go into a similar situation it would be to ask your adviser a simple question: Is it ever a good time to liquidate a 401k and invest in something else other than the stock or any other market? If he/she says no, shake his/her hand, thank him/her and walk out. The correct answer is: Yes, the option of liquidating a 401k should ALWAYS be an option. Especially when the fund is dissappearing in front of your very eyes.

Have any of you had a similar experience?

I agree with a lot of what you've typed.  I work as an ERISA attorney and I've seen a lot of stuff like this.  The worst part is is that an ER can design his company's plan to restrict the investment of your funds in the plan to only those investments he offers.

You are fucked.  You can't roll the money out...there's no distributable event...I mean you are not going to quit your job just to reinvest your money.  You can withdraw your money before age 59.5...and incur full taxation and a 10% penalty on the lot.

These great 401k profit sharing plans suck balls.  They are a cash cow for everyone but the plan participant.

[Slapper]

I agree with a lot of what you've typed.  I work as an ERISA attorney and I've seen a lot of stuff like this.  The worst part is is that an ER can design his company's plan to restrict the investment of your funds in the plan to only those investments he offers.

You are fucked.  You can't roll the money out...there's no distributable event...I mean you are not going to quit your job just to reinvest your money.  You can withdraw your money before age 59.5...and incur full taxation and a 10% penalty on the lot.

These great 401k profit sharing plans suck balls.  They are a cash cow for everyone but the plan participant.

And the worst thing of all is that most of these funds are total shit. Total shit. I mean, in a bear market they drop faster than you can say fast. On the other hand, during a bull market they take fooooooooor evvvvvvvvvvvver to make up any significant ground.

Right now I'm in damage control mode: Fired the son of a bitch (wouldn't even return my calls!), looking to break even on these funds, which I hope happens in a couple of months, provided nothing goes down the drain, and sell all this worthless crap. I'm dropping funds big time.

[Decker]

And the worst thing of all is that most of these funds are total shit. Total shit. I mean, in a bear market they drop faster than you can say fast. On the other hand, during a bull market they take fooooooooor evvvvvvvvvvvver to make up any significant ground.

Right now I'm in damage control mode: Fired the son of a bitch (wouldn't even return my calls!), looking to break even on these funds, which I hope happens in a couple of months, provided nothing goes down the drain, and sell all this worthless crap. I'm dropping funds big time.

I pulled all my plan investmensts and put them into the equivalent of a money market.  I ain't complaining.  I'm seeing 25-50 losses in other people's diversified accounts.

Now if they ride it out, in 20 years, they'll break even.

[Neurotoxin]

Hi all.

Gotta tell you my personal story about my experience in the financial market and my retirement fund. To make a long story short... here are the specs: Been contributing to the fund, maxing out for my wife and I, about 10 years through a financial adviser. We've invested in about 6-7 funds and 3-4 individual stocks, 2 of which went bankrupt and 4 out of the remaining 5 are still "in the red", while the only two that I've been able to break even on are the stocks I personally made the decision to buy (not the financial adviser).

All in all this financial "adviser" (more like thief if you ask me) has lost > 35% (close to 150k) of all the money we've put into the funds during these past 10 years. In the case of the funds that went bankrupt we couldn't get a single dollar back because when you invest in a fund that invests in shares you don't actually phisically hold the shares, you hold "units"; which is fine... until the company goes belly up and files for bankruptcy, because when liquidating assets shares take precedence to units (bonds > preferred > ordinaries > units) so you are lucky if you get 5% back of what you lost.

Thankfully I did move about 85% of the moneys out of these two funds, going against what this adviser was telling me to do, before they went belly up (thanks in part to the 401k thread here and the constant negativity, which turned out to be reality), but this was MY decision. This guy either did not see the mortgage debacle coming or he chose not to tell me. Come to think of it, he missed many of the mini-bubbles like the oil bubble, et cetera. And he works for one of the major financial firms in the industry!

Anyways, the two stocks I decided to buy myself, again, going against this guy's advise, was Citi, which I bought in December (small lot) at $ 5.26 and then again in later February (large lot) at about $1.20; and Enerplus, which I bought at $ 13.98 in late March and has since almost doubled and pays NIIIICE dividends. These two stocks, which I am in no way touting by the way, I was adamantly advised NOT TO BUY by this guy. It was my decision nonetheless. Goes to show you that many financial advisers are simply ill-equipped to advise anyone about buying anything, let alone stocks.

The straw that broke the camel's back took place about 3 months ago. While talking to a mortgage broker friend of mine, talk about refinancing my mortgage came up and he told me to "stay attentive". Since I was holding a 7.35% loan... let's say I was more than interested in lowering the rate. Lo and behold I stumbled upon a rate in the 4% range (with points) and I jumped on it right away. Loan got accepted and I decided to pay for the closing costs with a loan against my 401k plan (which at that point was up 2-3% thanks to Citigroup and Enerplus Resources) so that I could lock in the gain and pay myself a nice 5.25% per year (albeit no compounding), all the while saving a nice $ 600.00 per month.

And you know what this guy had to say? "Nooooooooo!! What have you done!! That is the worst decision I've heard of in my life!! Might as well wash your 401k down the drain!!".

This is the same guy who lost my family $140,000 in 8½ years of disservice (a staggering -5% per year). This is the caliber of "advisers" abundant throughout Wall Street nowadays. If I could give ANY advise to ANYONE about to go into a similar situation it would be to ask your adviser a simple question: Is it ever a good time to liquidate a 401k and invest in something else other than the stock or any other market? If he/she says no, shake his/her hand, thank him/her and walk out. The correct answer is: Yes, the option of liquidating a 401k should ALWAYS be an option. Especially when the fund is dissappearing in front of your very eyes.

Have any of you had a similar experience?

vast majority of "financial advisers" have NO CLUE about the Market.

zip, nada, zero...


NT

[Neurotoxin]

vast majority of "financial advisor's" have NO CLUE about the Market.

zip, nada, zero...


NT

fact = i've overheard financial advisor's referring to Mutual Funds as "Roadkill."



NT