My mutual fund IRA investment system can work for a 401k, a 403b, a 457, a 401a, or any portfolio of funds, however it requires some time and record keeping.
Another system, which takes less time, I am using for a small 401k account. It is based on the assumption that a fund going up will continue to go up. The increase in value may be because the fund is in the right place with the right stocks or the manager is doing great or both. I really do not care, I just care that it is going up and hope that the trend continues.
I have never produced any long term studies of this system. I do not know if it makes money or loses money, so use it at your own risk. It seems to work for me.
One of the accounts I manage with this system was up 8.2% first Qtr 2012 and I broke a rule by not watching it every weekend. This account is the only one I have with minimum contributions so the gain calculation was easy.
I maintain a list, in a spread sheet, of the symbols and performance for the funds available in my 401k. For the company I work for the list is:rgafx pafdx vinix flpsx passx rerfx fffbx fffvx fffcx ffvfx fffdx fftwx fffex ffthx ffffx fffgx fffhx fffax oakbx fdeex pttrx.
Some companies have funds which are not publicly traded so they cannot be evaluated. In that case, I ignore that fund or find a similar objective fund whose performance is about the same and follow it (for example, all S&P500 funds perform about the same).
Each weekend I open a web site called www.marketwatch.com , clicking on the investing tab, research tools tab, and then the fund comparison entry under the “mutual fund center” title – URL is http://www.marketwatch.com/tools/mutual-fund/compare.
In the box I copy/paste the symbols of my 401k funds – there is a 5 fund limit.
The results shown are the 1 wk, 13 wk, ytd, 1yr, 3yr, 5yr and 10yr gains.
I record the 13 wk gain for each fund on my spread sheet so I can compare them.
(Since I maintain 2 weeks worth of information, before I record the 13 wk gain this week, I copy this week’s data into last week’s data and then update this week’s data.)
For a recent week, my 401k fund’s 13 week performance looked like this:
This Week —-
rgafx pafdx vinix flpsx 11.21 7.76 9.75 10.75
passx rerfx fffbx fffvx fffcx 10.08 9.53 2.77 4.43 5.45
ffvfx fffdx fftwx fffex ffthx 5.53 6.26 7.22 7.54 8.32
ffffx fffgx fffhx fffax oakbx 8.45 8.50 8.77 2.77 5.78
fdeex pttrx 9.00 2.97
(Fund rgafx was up 11.21%, fund pafdx was up 7.76%, fund vinix was up 9.75%, and so on.)
Last Week —-
rgafx pafdx vinix flpsx 10.21 7.06 9.05 10.70
passx rerfx fffbx fffvx fffcx 10.00 9.33 2.87 4.33 5.35
ffvfx fffdx fftwx fffex ffthx 5.43 6.26 7.23 7.44 8.42
ffffx fffgx fffhx fffax oakbx 8.35 8.30 8.27 2.78 5.28
fdeex pttrx 8.90 2.77
I maintain a list of this week’s numbers and last week’s numbers so I can easily see if the performance is increasing.
I have my funds listed no more than 5 per line so I can easily copy/paste each line into www.marketwatch.com.
Since my 401k frowns on “excessive trading” my goal is to keep my investments in two of the top five funds. So on this week, if I was only invested in the top 5 funds, rgafx, vinix, flpsx, passx, or rerfx, I would do nothing. Otherwise I would exchange the investment I had in a non top 5 fund into one of the top 5 funds – the highest ranking fund in which I was not invested. I would only exchange into a fund if the 13 week performance this week was better than its 13 week performance last week. If none of the top 5 funds met the exchange criteria, I would hold on to my funds until next week’s evaluation. When any fund I own drops to a 13 week performance number was less than 1%, I exchange it into the money market or stable value fund.
One other thing to remember is that there is always a money market or stable value fund in any limited portfolio of funds. In the past, those paid about 1% per quarter but now pay only about 0.2% or less per quarter. So any time the top 5 funds do not all exceed 1% or the fund I owe does not exceed 1%, I just arbitrarily exchange to the stable value fund. If you can only make 1% per quarter in a fund, I feel that is too much risk for too little return.
If you have questions or comments, please email me.
Updated 20Apr12
11May12 – Obviously the numbers above were during a better market than today. Today the two funds I own are growing less than 1% for the last 13 weeks. The two funds which are doing better than 1% have lower 13 week numbers this week compared to last week’s 13 week numbers, thus I am switching everything to the stable value fund. Not a good investment, but it is a good place to hide when everything else is declining. Fidelity, in their stupidity, has a 1.5% fee on any investment in FLPSX held for less than 90 days. My feeling is that since a fund can drop 1 or more percent in a day, I’ll pay fee (although I won’t like it).