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☆ Why 401(k) plans are the 'final frontier' for exchange-traded funds
▼ + stars: | 2024-10-17 | by ( Greg Iacurci | ) www.cnbc.com time to read: +3 min

Momo Productions | Digitalvision | Getty ImagesWhile many investors have flocked to exchange-traded funds, they haven't gained much ground with 401(k) plan participants. The report found that 401(k) plans used ETFs most readily for sector and commodity funds — but even then, they did so just 3% of the time. Key benefits are 'irrelevant'Mutual funds, collective investment trust funds and separately managed accounts held the lion's share of the 401(k) assets across all investment categories, PSCA data shows. However, those benefits are "irrelevant" in 401(k) plans, Blanchett said. Blanchett said 401(k) plans are also long-term accounts in which frequent trading is generally not encouraged.

Persons: Momo, David Blanchett, hasn't, Philip Chao, Chao, Warren Buffett's, Blanchett Organizations: Exchange, Mutual, Morningstar, Investment Company Institute, ICI, of America, Vanguard Locations: John , Maryland

☆ Planning to delay retirement may not rescue you from poor savings
▼ + stars: | 2024-09-17 | by ( Greg Iacurci | ) www.cnbc.com time to read: +2 min

Alistair Berg | Digitalvision | Getty ImagesPlanning to work longer is a popular escape hatch for Americans who feel they've saved too little to support themselves in old age. About 27% of workers intend to work in retirement because they need to supplement their income, according to a new CNBC and SurveyMonkey survey. While working longer is among the best ways to shore up one's nest egg, the plan may backfire, according to retirement experts. If workers lose those wages, they'd have to figure out another way to make their retirement savings last. There are benefits to working longerWorking longer — for those who can do it — is a financial boon, according to retirement experts.

Persons: Alistair Berg, Digitalvision, they've, Philip Chao, Chao, EBRI Organizations: Getty, CNBC, Workers, Urban Locations: John , Maryland

☆ This is the 'billion-dollar blind spot' of 401(k)-to-IRA rollovers, Vanguard finds
▼ + stars: | 2024-09-16 | by ( Greg Iacurci | ) www.cnbc.com time to read: +3 min

Rollovers from a workplace retirement plan to an IRA are common after reaching certain milestones like changing jobs or retiring. watch nowAbout two-thirds of rollover investors hold cash unintentionally: 68% don't realize how their assets are invested, compared to 35% who prefer a cash-like investment, according to Vanguard. The asset manager surveyed 556 investors who completed a rollover to a Vanguard IRA in 2023 and left those assets in a money market fund through June 2024. "IRA cash is a billion-dollar blind spot," Andy Reed, head of investor behavior research at Vanguard, said in the analysis. 'It always turns into cash'The retirement system itself likely contributes to this blind spot, retirement experts said.

Persons: Sergio Mendoza Hochmann, Andy Reed, Stocks, Philip Chao, Grace Cary, they're, Chao Organizations: Vanguard, Vanguard IRA, Finance, Security Locations: John , Maryland

☆ Having too many options can paralyze investors. Here's how you can overcome 'choice overload'
▼ + stars: | 2024-01-29 | by ( Greg Iacurci | ) www.cnbc.com time to read: +3 min

Humans get overwhelmed by too many options, a behavioral finance concept known as "choice overload." How investors encounter choice overloadChristopher Ames | E+ | Getty ImagesIt's not just investing: The choice paradox can extend to things like ice cream flavors and apparel, for example. Given these behavioral biases, retailers and others have evolved, making it less likely consumers will experience choice overload "in the wild" today, said Dan Egan, vice president of behavioral finance and investing at Betterment. Do-it-yourselfers may have about one to two dozen investment options, at most, from which to choose, reducing the choice friction. If you don't give people an easy choice, "it's really hard for them," Blanchett said.

Persons: Philip Chao, Brian Scholl, David Blanchett, Samantha Lamas, Christopher Ames, Sheena Iyengar, Mark Lepper, Dan Egan, Egan, that's, Blanchett Organizations: Sdi, U.S . Securities, Exchange Commission, Investor, Morningstar, Finance Locations: John , Maryland

☆ Biden used first veto to save a 401(k) investment rule. Here's what it does
▼ + stars: | 2023-03-21 | by ( Greg Iacurci | ) www.cnbc.com time to read: +3 min

watch nowFew 401(k) plans — about 5% — offer an ESG fund, according to PSCA survey data. The [Biden] rule doesn't force you to consider ESG. Under the Biden rule, employers must still consider ESG factors within the context of what is in investors' best interests. "The [Biden] rule doesn't force you to consider ESG," Chao said. The Biden administration issued the final text of its investment rule in November, shortly before Republicans assumed control of the House.

☆ 2022 was the worst-ever year for U.S. bonds. How to position your portfolio for 2023
▼ + stars: | 2023-01-07 | by ( Greg Iacurci | ) www.cnbc.com time to read: +6 min

Interest rates started 2022 at rock-bottom — where they'd been for the better part of the time since the Great Recession. Bond prices move opposite interest rates — as interest rates rise, bond prices fall. Duration is a measure of a bond's sensitivity to interest rates and is impacted by maturity, among other factors. We can see why long-dated bonds suffered especially big losses in 2022, given interest rates jumped by about 4 percentage points. The traditional dynamics of a 60/40 portfolio — a portfolio barometer for investors, weighted 60% to stocks and 40% to bonds — will likely return, advisors said.

☆ New retirement account rules make it easier to tap savings early for emergencies
▼ + stars: | 2022-12-27 | by ( Greg Iacurci | ) www.cnbc.com time to read: +7 min

But they said the rules also amount to another source of so-called "leakage" that run contrary to the overall goal of retirement savings: to build a nest egg for the future. Participants can also access 401(k) savings via loans or non-hardship withdrawals. Non-hardship distributions also hit an all-time high in October — almost 0.9% of participants took one that month, according to Vanguard. And the share of workers taking 401(k) loans rose to 0.9% in October from 0.8% at the beginning of 2022. Beyond the apparent acute financial need among households, hardship withdrawals carry negative repercussions like tax penalties.

☆ 401(k) 'hardship' withdrawals hit record high, Vanguard says — another sign households feel the pinch of inflation
▼ + stars: | 2022-12-08 | by ( Greg Iacurci | ) www.cnbc.com time to read: +6 min

Thomas Barwick | Stone | Getty ImagesThe share of retirement savers who withdrew money from a 401(k) plan to cover a financial hardship hit a record high in October, according to data from Vanguard Group. Nearly 0.5% of workers participating in a 401(k) plan took a new "hardship distribution" in October, according to Vanguard, which tracks 5 million savers. Americans are 'feeling the pinch from inflation'Nearly all 401(k) plans allow workers to take hardship withdrawals, but employers may vary in their rationale for allowing them. Participants can also access 401(k) savings via loans or nonhardship withdrawals. Beyond the apparent acute financial need among households, hardship withdrawals carry negative repercussions.

☆ Robinhood to pay a 1% 'match' on customer contributions to retail individual retirement accounts
▼ + stars: | 2022-12-06 | by ( Greg Iacurci | ) www.cnbc.com time to read: +6 min

The retail brokerage will pay a 1% "match" on contributions its customers make to a Robinhood individual retirement account, the firm said Tuesday. The firm is billing it as the first-ever match paid to retail IRA customers (i.e., outside of a workplace retirement plan.) A 401(k) match is a common retirement benefit offered by employers that sponsor a workplace retirement plan. How the match worksA 401(k) match is generally structured as a share of employee contributions. There aren't any contribution or account minimums to get the Robinhood match, and trades don't carry commissions.

☆ The fear of loss can cost investors big-time. Here’s how
▼ + stars: | 2022-11-29 | by ( Greg Iacurci | ) www.cnbc.com time to read: +6 min

Westend61The fear of loss is a powerful emotion for investors — and, if left unchecked, can cost them big bucks in the long term due to years of forfeiture of investment gains. watch nowFor investors, that evolutionary impulse plays out as "loss aversion bias." Investors have a bias toward avoiding financial loss. Prioritizing the avoidance of loss over earning a gain "is a major reason why so many investors underperform the market," Aguilar said. Meanwhile, 401(k) investors pulled money out of stock mutual funds during the same time period.

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