The Myth of Diversification
The mid-90s financial buzzword was without question "Diversify!" The champions of mutual funds... and by that I mean them what sell's 'em... declared that diversification was the only mature way to invest... they would have you believe that it is the answer to the age old dilema of risk vs. return.
Ya see the "thinking" goes that since you're invested in mutual funds that own many many many stocks... you're really invested in the Index itself... and the index always goes up.
I could go on and on about how wrong this is. I could offer in-depth statistical analysis... but why? That's what Vox Day is for. I'll stick to the plain and simple, though it will require some cypherin'.
Take a look at your 401k statements. Look at your yearly contribution... the total yearly contribution. If you can't find it, just look at how much they take out of your check and cypher from there, and don't forget to add your company's match. Found it yet? Good. Write it down.
Now figure how long you've been workin' where you are... and multiply that by your annual contribution... dude! Stay with me! I'm talkin' about the number we worked out in the paragraph above this one! See why I made you write it down? GAH!
Now call that number X. So if you been workin' at Widgets R' Us for 10 years... and each year you put in 10 grand... in that case X would be 100,000.
Finally... compare that number to what's actually in your 401k right now. Is X more or less than the total value of your 401k?
Assuming its more, and its probably not... head on over to MoneyChimp and put your numbers in their calculator. Compound it 1 time per year, at 1% over the number of years you've been working. That's how much you'd have if you had put your money in a basic savings account.
Do it again at 2%. That's how much you'd have if you put it in a better savings account.
In our case, not only are our returns less than they would've been in a basic savings account, they are negative. Meaning, for us, X is more than the value of our 401k.
Think about that. We'd have more money in our retirement right now, if we'd been taking that same amount and stuffing it in a box under the mattress. Worst of all, we cannot get out of the 401k. We have no choice. We're stuck with this "Investment", for our own good.
And just so you know... our "retirement plan"... the one that is losing real money, and has been for the last 4 years... is not with some po-dunk little company. In fact, its with a major firm, that you all would recognize... I'd wager that some of you are even in the same one.
You never get decent information from these people. You have to do it yourself. Please take a minute or two today and take a look at this. I'll wager it will be an eye opening experience for you.
Oh... and don't bother calling your local district attorney. Apparently they require actual physical penetration before they'll charge these scum with rape.