401K Investing Basics πŸ“ˆ 401K Investing Strategies (Part 1)

what is up my fellow youtubers welcome
back to MKchip money and life TV where we talk about how you can improve your
financial position career and life I am Mike also known as MK the CPA and you
guys know my sidekick chipper I’m here is a video I’m super excited to share
with you we’re going to be covering how you can pick the best 401k funds are the
best 401k investments and your company’s 401k plan just so you guys know this is
going to be the first video in a series that I’m producing on this so kind of
think of it like a class so in this first video what I’m going to do is I’m
going to do an overview of the five steps and then in their videos after
this we’re going to go into detail in the tutorial type of fashion where I
show you how I go about doing each step so that you can mimic my process if you
choose to do so alright guys and with that being said
let’s dive right into this so most of us have heard I’ll kind of have an
understanding of what a 401k is right I mean it’s where you put part of your
income into this retirement plan or basically we are deferring our
income for a later time period and when we defer our income we don’t have to pay
tax on that money yet so the idea is guys as you’ve probably heard instead of
being able to invest only 75 cents after taxes because we’re deferring our income
were able to invest a whole dollar at a time and so with that whole dollar you
know we’re able to buy more units or shares of this mutual fund in other
words we’re able to let our money grow quicker because we’re putting we’re able
to put more in and then it’s taxed when we take it out at a later date and of
course you guys probably know if we invest in this thing in our 401 K for
the next 20 30 40 years we should become rich are very are wealthy enough to be
able to retire we’ll be they say will be loaded in cash so much cash you’ll be
able to buy a boat now there’s only one little problem with
this this whole investment idea in our 401k we don’t frickin know how to invest
hey school never teaches us how to do any of this and yet we’re supposed to
rely on this 401k retirement plan for the rest of our life are you kidding me
so that is why I’m producing this video is because I’ve come up with a process
that has worked very well for me not that you have to use it but I think it
could help you by the way guys I am by no means a professional investor and so
please do not take this as legal or investment advice however by using this
process I reallocated my funds at the end of 2016 are towards the end of 2016
and so far just in this year alone in 2017 for the first six months I’m
already ahead 20% on my 401k investments and it’s the best my plan has ever done
so I think this process could work for you or at least hopefully help you get
better returns in the future so since school didn’t teach us what else can we
do to learn about our 401 K investments let me think for a second oh I know
we know talk to the financial advisor that comes to our company thanks know
what I’m talking about it’s that person who comes to your
company or organization usually every four months to give you a market update
or when the markets really taking a dive they comes in well we can ask them right
we can ask them to choose then best 401k investments for us can’t we actually
we’d be completely wrong if we were to assume that the financial advisors have
a thing called a liability although they can advise us and it’s not a bad idea at
all to talk to them and learn about the funds in your 401k plan we cannot expect
them to pick the investments for it both of them will not because if they say ok
well you invest in a B and C and then do nothing else well what would happen is
if later on 30 20 30 years down the road you’re full on
key investments tank well then that’s going to open them up to liability this
video is about choosing and picking the best or m’kay investments this is truly
about us you and I picking our own investment because nobody else is going
to do it for us so we if we want the best rate of return in our 401k plan and
the best overall investing strategy we’re probably going to have to pull the
trigger ourself we can like I said we can bounce ideas off of them off to
financial advisors but we still need to be the ones in charge of this and with
that being said let’s start going over the five steps to this investing process
okay guys the first step to choosing the best 401k funds in your 401k plan is to
actually know what the funds are so the first step is really fun choices it’s
knowing what funds are available for you and I in our 401 k plans so how do we do
that well guys what we do is if you don’t know where to go to learn about
this first you need to go to I would recommend going to a human resources
department of your company or whoever is in charge of that and say hey I want to
learn more about my 401k plan and the funds that are available in that plan
can you tell me or point me where to go so I can learn more about this and also
after whoo-hoo therefore one key provider for our company and just so you
guys know if you don’t know what a provider is it’s usually the plant
administrator who’s helping your company manage their 401k plan and so some
examples would be one John Hancock – Vanguard are three fidelity those are
some of the most common for 1k plan providers in the nation so after you go
and talk to your human resource department what they’re probably going
to tell you is that there is a website online for that provider so like you can
go to Vanguard comm fidelity comm and if you don’t have an account created
already you’ll go ahead and you’ll set up an account and from there you can
look in the website and find the area where you’ll see all the funds available
to you each company an organization is going to have a different 401k plan so
your fun toys are truly going to vary by the provider
you’re for 1k but also how your company set it up and what in my example I have
60 choices available to me 60 total fund choices in your plan you might have 100
choices or more you might have less than 50 it all varies based on your company
and as you guys are doing this process be thinking of having a pen and paper
available that will really help so that you can take notes as you go when you’re
doing your research i really suggest using Microsoft Excel to do this because
you can easily manipulate the data later and that will help save you time going
forward now you’re probably thinking Oh Mike if there’s one hundred fun choices
how long is this kind of take me is it going to take me all day well you know
this could take you a couple hours guys but it is so worth your time to do this
you think of all the years we’ve been working for a money and if we’re not
trying to get the best return on investment it can literally cost us
hundreds of thousands of dollars by not taking the time to do this so we need to
freak and do this and do it right are the best we can
what I would recommend doing because this is going to take some time is break
your research into one to two hour chunks and then come back at later time
and do some more all in all this might take you a couple hours I don’t think
it’s going to take you more than ten hours to really go through all of your
funds but I would take the time to learn how to do this okay on to the second
step is criteria to narrow down our search choices are in our research time
required we’re going to select some criteria in that crate because we don’t
want to be spending the rest of our life researching 401k funds none of us want
to do that it is not very fun it could be interesting for some people but it’s
not the thing you want to be doing at the end of the day all the time and so
we’re going to pick criteria that’s important to you you know like for
example criteria that’s important to me is I want to know the fee structure the
fee ratio of each fund I want to know what funds have been around over ten
years and of the funds that have been around over ten years who is performing
the best over a ten year period consistently those are the funds I
usually start to target so if you have a hundred funds in your 401k plan by
selecting specific criteria we’re going to try to narrow those down for you so
you’re really only a research maybe 25 out of the hundred funds that
way it’s going to save you a lot of time and then after the process after you
filtered through this process we want to find what we believe to be the top 10 or
15 funds in your entire 401k plan and go from there okay
step three is an obvious one but we need to learn about the fund most people have
no freaking clue what they’re actually invested in and it doesn’t make sense to
me but they don’t even they’re just blindly investing and hoping that works
out well we can’t do that guys we cannot get ahead financially or anything else
in life unless we are truly intentional we can’t be slacking off at this you can
usually learn the most about the funds in your 401k providers website you can
log into your online 401k account and read about the funds you can see what
companies the each of these funds hold is if you don’t know about mutual funds
mutual funds are made up of individual stocks so in a sense you are investing
in individual stocks except it’s all in a group we want to learn what doesn’t
each one made up is it mainly made up healthcare stocks is it mainly made up
of blue chips is it made up of technology stocks you guys get the idea
so that’s number three learn about the funds as much as possible so that you
actually know what your money’s invested in number four use free resources for
your research there are so many free resources available to us online we have
more access to free information than any other generation in human history so a
simple one would be that I use a lot is Yahoo Finance because these mutual funds
have ticker symbols just like a stock so you can go to Yahoo Finance put in that
ticker symbol and you can see a visual graph of its stock performance it’s like
a stock chart basically and you’ll see that in a future video and I’ll show you
how I analyze that you can learn about the more about the company our mutual
fund from that vantage point you can see visually visually how it does and good
times and bad and see if you would want to own it
plus there’s other information on Yahoo Finance that will be available about
that fund and the great part is it’s easy to compare it to other funds on the
same stock chart so I’ll make sure to show you guys that in a future video
this one guys is pick investment after we realized hey what
funds are available in our 401k plan after we’ve selected the criteria of
what funds we’re looking for or what we want our funds to have after we’ve
learned about the funds and after we’ve used our free investment and resources
to learn more about this and do our analysis and research now we’re ready to
invest if you’re already invested great no problem
because after doing this process you might find hey I don’t want to be
invested in this anymore so instead of investing in this I’ll invest in that so
you can then move your money out of that fund and put it in another fund or you
can just stop putting your cash to that fund you already had and just redirect
that cash to the new fund that way you don’t have to sell off your original
investment if you don’t want to but we’re going to go into detail about that
in the future and if you guys have never invested at all this is the perfect time
to learn and not only do I do this process for my 401k plan guys I use a
similar process for my brokerage account investments as well as my wife and I
Roth IRAs so far it’s been working for us guys and I think it can work for you
so give it a shot in 2017 I just wanted to leave you guys with this it has never
been more important to learn how to invest then right now
pensions are dead unless you work in certain government sectors you’re
basically not getting the pension in other words the company is no longer
going to fund your retirement unfortunately you and I have to bear
that burden now and that’s just the way it is that’s the challenges our
generation faces so we have to learn how to properly invest whether it’s in our
401k whether it’s a combination of our 401k investments or something else but
we just have to learn to become investors and like I said unfortunately
school is not going to be teaching this information anytime soon or ever I have
no idea guys this is a great opportunity to take control of your investments your
future and if you guys can get higher rates of return on your investment you
can literally shave off years of your on your retirement because your money will
compound that much faster and so hopefully the idea is you won’t have to
work as hard or as long the rest of your life alright guys make sure to hit that like
button if you have not already I would really appreciate your support if you
have any questions or comments make sure to leave them in the comment section
down below I will definitely make sure to respond your homework for this week
I’m giving you a homework what so by next week what I would like you guys
they have find out what your fun choices are and make a list of all of your 401k
investments that’s your homework for this week and that will get you started
you can help us promote financial literacy and career and life success
skills by thinking of just one person who you feel could benefit from this
information and by sharing this video with them you can share this video with
them by hitting the share button on your computer or by hitting the share button
from your cell phone thank you for all the love and support that you guys give
me on this channel don’t forget you can follow us on Facebook and Twitter by
hitting those address links over there and if you’re not already subscribed
make sure to do so by hitting the subscribe button down below or the
subscribe button that is found below the video alright guys as always thank you
so much for your support I love you I can’t wait to see you next week as we
dive further into this process so that we may choose the best investments in
our 401k plan I hope you guys will stick with me on this I really think it’s
going to be worth your time what guess that I’ve already gotten a 20% return
for the first six months of this year and I think you guys can get higher
returns as well I’ll see you all in this week’s video peace Oh

23 Replies to “401K Investing Basics πŸ“ˆ 401K Investing Strategies (Part 1)

  1. Hey guys hope you enjoy the video. This is only the first video in this video in the series. Many more to come. There is virtually no education that I know of that teaches us how to pick and select the investments in our 401K for above average returns.. I Hope to change that. Please leave comments and questions down below. I would love to hear from you guys.

  2. I never comment on videos. But this was a great video. Believe it or not there aren't a ton of easy to understand overall detailed explanations of 401ks. Great job and thank you!

  3. How do you choose a different funds If you like to switch or change the funds that a company already picked for you

  4. Great video. I have a pretty good grasp of this subject but i believe that for a novice, this video would be very helpful. πŸ‘πŸ½

  5. Blooom is THE robo advisor for your 401k. For a flat $10 a month, blooom will pick the funds in your 401k that best align to your retirement goals while also minimizing hidden fees so you can β€œset it and forget it”.

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  6. great video! very informative and exactly what i was looking for! i’ve shared this vid n love the video game themes πŸ‘ŒπŸ»πŸ‘ŒπŸ»

  7. I still think high school should have had a class about explaining all this to us! but thanks to youtube now we do! so, thank you(:

  8. I like using Acorns. https://acorns.com/invite/NUHXX3 It diversifies the portfolios based on your desired risk all without you having to interact. You get $5 invested free with this link. It also links to your bank so when you make a purchase it rounds to the next dollar and invests the change. Your literally investing with spare change.

  9. it would be great if someone who just retired and show us how much he has in the 401k and how much he invest throughout his life

  10. Just came across this great video, it confirms my suspicion on what i need to do first. Haven't done any hardcore reading/researching since maybe Summer 2009. Looking forward to this series

  11. You have no idea how much your video has helped me. I thank you from the bottom of my heart. I have never commented on a video before but after looking at my 401k balance after 2 weeks of following your advice I just had to. Thank you. Thank you. Thank you. 😊

  12. Thank you for make me understand more about the 401k. I got my first job and now I will decide how they will invest my money and where.

  13. I realize this is an older video, however, despite some of the negative comments, this was a great and informative video! It's a shame that so many people have no sense of humor and only feel the need to point out negative aspects. Don't let these negative comments dictate and mold your videos to become bland and mundane information. Be yourself and keep making great videos!

  14. I made my first million from investing my ROTH IRA in stock, Mrs Nina Jeanne Rose is a great account manager ,she helped me through my investment so i recommend her if you look to invest wisely without loss

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