Permanent Value

Week in Review- 12/19/2016

Bruce Doole
December 19th, 2016

It’s Time for Your 401(k)’s Annual Physical
Here are five to-do items to keep your 401(k) on track in 2017:

1. Check the fees

The more you pay in fees, the less money you have working for you. For example, an investor bulletin from the Securities and Exchange Commission notes that $100,000 in a mutual fund that earns a 4% annual return over 20 years and has a continuing 0.25% fee will grow to $208,413. Raise that fee to 1% and you end up with $179,213. That’s a fee bite of about $29,000.

If your employer “auto-enrolled” you into the 401(k), your money likely is going into a target-date fund, which essentially promises to manage your money until your estimated year of retirement. That might be the right choice for you, but note that you’re likely paying extra for that convenience.

2. Consider new choices

Your 401(k) may have improved since last time you looked, so research any new products being offered. Roth 401(k)s let you contribute after-tax money that then grows tax-free. (With a traditional 401(k), you contribute pretax money and then pay taxes on the money when it is withdrawn from the plan.)

3. Check your asset allocation

You should check your account at least once a year to make sure market gyrations haven’t caused you to be overly invested in stocks or bonds. In other words, rebalance, if needed.
If you’re a 401(k) saver who hasn’t considered asset allocation (that is, deciding what percentage of your money to invest in different types of investments), it is time to start.

4. Review the whole picture

Consider your 401(k) in the context of all of your invested money. Consider the tax advantages of your investments when deciding which account to use. For example, corporate bonds are taxed at ordinary income-tax rates. “You’d have to pay that tax on an annual basis in your taxable account, whereas that would all grow tax-deferred in your retirement account,” Meanwhile, tax-free municipal bonds make more sense in a taxable account.

5. Save more

Did you increase your contribution rate this year?

The best savings rate for you depends on your circumstances, but an oft-cited retirement-savings goal is to save at least 15% of income.

Source: The Wall Street Journal


  • China Industrial Production rose 6.2% year-on-year in November, up slightly from 6.1% in October.
  • U.K. CPI largely matched expectations in November with a 0.2% monthly rise, which lifted the annual inflation rate to 1.2%.
  • U.S. PPI rose 0.4% in November to just exceed Econoday’s high estimate.
  • U.S. Retail Sales managed a 0.1% gain for November.
  • U.S. Industrial Production fell 0.4% in November due to unseasonably warm weather.
  • U.S. Jobless Claims indicate strength in the labor market with initial claims falling 4,000 in the Dec. 10 week to 254,000.
  • U.K. Retail Sales slowed in November but rose 0.2%, which was in line with expectations.
  • U.S. Housing Market Index was up 7 points in the December reading to 70 and looks to end the year on a strong note.

Source: Ivy Weekly