(Use this Section for 403(b) Plans)
The deep corrections in the market since 2000 decimated many 401(k) accounts. Many people delayed their retirement or returned to work to rebuild their portfolio.
The Fund Trading Performance Section shows when using actual and historical data that you would have seen substantial profit during this period.
An active investing strategy supported by Fund Trading can be a superior strategy to control risk in volatile markets.
Use the Fund Trading Long Strategy, since 401(k) plans do not allow selling Short or trading with margin, due to government regulations.
When receiving a Sell Signal, you would move your money into a Money Market Fund or Government Bond Fund until the Market Trend Trading System issues another Buy Signal.
Almost all 401(k) plans have an Index Fund to allow the...
implementation of the Fund Trading Strategy
My 401(k) plan is administered by Fidelity. Here is an example using historical data of how returns can be increased by using Fund Trading's Trading Signals with Fidelity or with other 401(k) plans.
Check Out Fund Trading's 401(k) Market Beating Returns!
Fund Trading 401(k) Trading Strategy vs.
Buy and Hold Trading Strategy
|Cumulative Return 1/3/2000 to 1/3/2007 (7 Years)
||Annual Average Return|
|Fund Trading 401(k) Strategy - Uses Fidelity Growth Fund - FDGRX & Fidelity Money Market*
|Buy & Hold Fidelity Growth Fund - FDGRX
|| - 18.0%
|| - 2.6%|
|Buy & Hold Vanguard Index Fund Plus (S&P 500 Index Fund) - VIIIX
|| - 2.4%
|| - .3%|
*Includes delaying trades to comply with Fidelity's 30 day trading restriction. The Fund Trading 401(k) Trading Strategy invests in the Fidelity Money Market during sell signals, the additional return from the time invested in the Fidelity Money Market was not included, so Fund Trading returns would be slightly higher. The 10 year Fidelity Money Market average annual return on 1/15/2007 was 3.92%.
Unlike an IRA, your 401(k) will generally be limited to a handful of Funds selected by your plan administrator.
Some Fund offerings will be good and some not so good. If you still have a 401(k) in place from a previous employer, you may want to consider moving the funds into an IRA for the additional investment and withdrawal flexibility. An IRA allows you to take cash out without penalty for your first down payment on a house, for higher education or to pay health insurance premiums.
An issue with 401(k) plans is how taxes are handled upon your death. At that point, only your spouse has the option of rolling the 401(k) into an IRA. If your spouse dies before you do, your beneficiaries would be forced to take distributions spread out over a number of years.
If the funds were in an IRA, your beneficiaries would be able to roll your IRA into a stretch IRA, and not take the mandatory taxable distributions, only required minimum distributions over their lifetime. Check with your financial advisor to review your own particular situation.
The Fund Trading 401(k) Trading Strategy uses your own 401(k) Mutual Funds that move similar to the Nasdaq 100 and Russell 2000. You will trade when you receive a Fund Trading Buy or Sell Signal. Split the dollar amounts 50% / 50%. An alternative strategy would include the S&P 500, splitting the dollar amounts in thirds.
Some 401(k) plans have added restrictions about how often they can be traded. For example, Fidelity requires you to wait 30 days before you can trade without an additional fee. Just work within the rules of your plan.
If it is unclear which funds in your 401(k) Plan correlate with the major Indexes listed below, ask your plan administrator or use the process in the How To Trade Section.. Correlate means: "Two or more funds that mirror the movements of each other".
Your goal is to find the Funds in your 401(k) that move or track the following Indexes as close as possible or (correlate).
Many plans will have a Technology Fund that will correlate with the Nasdaq 100 or a Large Cap Growth Fund that will correlate with the S&P 500.
Either a Mid Cap Growth or a Small Cap Fund should correlate well with the Russell 2000.
If the funds are traded publicly, you can use the process outlined in the How To Trade Section to chart them and check their correlation.
INDEX SYMBOL DESCRIPTION
| Nasdaq 100
| S&P 500
|| Large Cap Stocks|
| Russell 2000
|| Small/Mid Cap Stocks|
Even within the restrictions of a 401(k) account you should be able to significantly increase your returns and reduce your risk with the Fund Trading System.
Portfolio A - Conservative - Long Only
With a Long Only Strategy; you only invest when the market is going up and you protect your principal in down markets by moving it into a secure interest bearing Money Market Fund or Government Bond Fund.
|| Type of Fund to Purchase|
|Sell or Cash
||Money Market Fund
||Government Bond Fund|