After some soul searching and fact checking, I've decided it's time to dump the 401(k). I know this sounds like sacrilege to the investing faithful, but I think it's a wise financial move.
My company contributes 7.5% of my salary to my 401(k). My employer makes this contribution even if I don't contribute a dime. So I'm thinking about discontinuing my contribution.
Reasons to Dump My 401(k)
- Crappy Funds
- High Expense ratios
- Opportunity Cost
- Lack of Control
I'll eloborate a little bit more in some future posts. As with all financial decisions, I'm requiring a waiting period. However, the worst that can happen is that I decide to contribute to my 401(k) again and that I have to fill out another form.
And just to head off this question, it doesn't have anything to do with current stock market performance. It has everything to do with paying high fees for poorly managed funds.
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Comments
2 Comments so far
Hmm. Not sure if dumping is the right attitude. Right now dumping it in a slump will not recover $$ lost . If you mean to lower your contribution, then I say lower it as much as you are able with out effecting your employer match. at my job we have to contribute at least 3 % to get the match. We are also given a lump drop every year at 7% of our salary. Every little saving helps for our future. you might want to consider depending on your age something more risky
What do you consider "crappy funds" and "high expense ratios"? What are you doing with your money instead?