How do I use this site?
401kTutor.com has 2 main purposes: to give you a basic education about the different investment options in your 401k and to provide you with suggested ongoing investment allocations broadly based on how far away you are from retirement, your general attitude towards risk, and your ability to withstand risk. In addition, make sure to sign up for the periodic reminders to keep your 401k allocation up to date.
I just got my suggested 401k allocation. How do I implement it in my 401k account?
The next step is to log into your 401k account. Check with your HR department at work if you don’t know how to do this. Another place would be information from the quarterly 401k account statements that your retirement plan administrator sends out. The investment options, the Mutual Funds or ETFs, in your 401k are categorized by asset class just like we have on your suggested allocation chart. Identify the funds that correspond to each investment category in your suggested allocation and proceed to allocate amounts to it in the percentage mentioned in your suggested allocation.
Which allocation I should use, the less detailed or more detailed one?
That depends on the number of the fund options in your plan. While we have each allocation spread out across 5 asset classes (Stocks, Bonds, International, REITs & Money Market) some 401k plans have many fund options that include several stock funds, bond funds and international funds. If you have funds that correspond to all the asset classes mentioned in the detailed allocation then you should use that; if not then use the basic less detailed allocation.
What if I have more than one fund that corresponds to each asset class?
If you have more than one small cap stock fund for example then you should 1) read each fund’s description and choose the one that adheres more to investing in that asset class, and 2) the one that has lower annual fund expenses.
How do you come up with your 401k allocations?
401Tutor.com employs tactical asset allocation methods that are based on a user’s risk tolerance, time until retirement and current market conditions impacting the various asset classes. Unlike most traditional web-based asset allocations that are based solely on a user’s risk tolerance and time horizon, our asset allocation models take into consideration current market and economic conditions and how these conditions can impact each asset class in your allocation model. When market conditions change by a degree warranting a re-evaluation of our allocations models, we will describe those allocation changes in a blog post and alert all those who signed up to be notified.
I Have a 403b or a 457b plan at work. Can I use these allocations?
Yes. Your employer provides you a 403b retirement plan if you work for a not-for-profit organization, hospital, or educational institution and a 457b retirement plan if you work for a City or State governement or public school. A 401k and a 403b or 457b are almost idnetical in most aspects if your investment options include Mutual or Index Funds.
Why did you launch 401kTutor.com?
According to the Investment Company Institute, there were more than 52 million active 401k plan participants and millions more non-active participants as of March 2014. Survey after survey has found that a big percentage of those participants need more help and education when it comes to properly allocating and investing their 401k accounts in order to better meet their retirement needs. To efficiently help the millions of users who need this retirement assistance we felt that an online website was needed that combines all of the following 4 essential features: 1) it was free, 2) educated 401k plan participants, 3) provided suggested 401k allocations and explained the reasons for those allocations and 4) provided reminders for its users to come back and rebalance their portfolios. Based on our research, 401kTutor.com is the only website that offers all of those 4 features in one place.