Monday, December 26, 2011

guess who's back ... back ... back

I have a confession to make: I have no idea what’s happening with my 401K. On my first day of work, all of the new-hires were cloistered with some lovely HR ladies for marathon signage. Work agreements, beneficiary forms (mom and dad, if I die—my money is split equally between the two of you, which means exactly nothing, since you have joint money), and also 401k forms. We had literally five minutes to pick from three standard investment options (portfolios with low, moderate, and high risk). Since I’m actually a 40 year-old in a 22 year-old’s body (now it makes more sense that I’m obsessed with saving for retirement), I went for medium risk—I think. And now, I get mail every month stating that there’s been yet another deposit into my retirement account. I’ve made a half-hearted effort to figure things out and log into my account, only to realize I need some account number of sorts, that I’m not really sure exists.

The good news is that at least I’ve set up automatic monthly payment from my paycheck into my retirement account (phew, that’s 4500 dollars/year well spent). And my company is fabulous, so they put money into a traditional 401K for me. But that’s pretty much it—mostly it’s embarrassing not to know where my money is going. The bottom line is that whatever fees are being assessed for following some moderate-risk plan are being taken out of my potential earnings. If I could figure out a simpler strategy—a combination of several index funds with low fees, I might be better off money-wise, and I’d be infinitely more in control of my money.

The first financial book I ever read was one of Suze Orman’s books about women and money. Her introduction focused on the lack of knowledge women often have about their finances, and the cycle it creates. When you don’t understand your money situation, it makes you stressed, and it makes you want to avoid dealing with your finances, which in turn means you can get off-track from your goals, or never set any in the first place, and then you never know where you stand. Not looking at our financial situation for fear of potentially uncovering something terrible prevents us from planning from the future, which is pretty ridiculous.

All of this is to say … ah, human nature. It may complicate things, but I will get to the bottom of my 401K situation and make sure to share with all of you along the way. In other news, I’m on a bus home for the holidays, after a few days with my boyfriend’s family (and + 1 adorable gifted scarf). In the past several months I’ve bought & discovered that I love jeggings (mock away, but only if you can spot the difference between them and regular jeans. Bet you can’t – women’s jeans are already stretchy, and all of mine are tight too.). I’ve started a job and all that entails—long hours, stress, but much learning and great new friends.

P.S. – I still haven’t opened a Roth IRA, but I’ve saved enough money from my job that I feel comfortable investing a lump sum and starting one. Stay tuned for that adventure

1 comment:

  1. Open Roth IRA NOW. I think you can still put 5K for 2011..

    I personally invest my 401k in funds (and just like you don't really know much about the specific funds. The return is ridiculously low so far..I think I made about 1% in 2011...which is pretty terrible..but I think it will get better as the economy starts recovering some time in the next decade). And then I invest my Roth IRA in individual stocks...(I was able to get ~15% in 2011..obviously higher risk (more volatile), but also substantially higher return!).