401k
401k Information

Merril Lynch 401k

Investors need a “you are here” label to gauge where they are and what lies ahead as they attempt to navigate their course safely toward acceptable rates of return in the financial markets.

In this blog post I present up to the minute data from a multitude of disciplines that I hope will firmly affix the “you are here” label while gaining a glimpse of the road that lies ahead.

Let’s take a look at global psychology first; since the onset of awareness of the debt crisis in Greece and fear of widespread contagion, governments have lost the political will to address fiscal problems correctly while avoiding a global growth deceleration capable of reversing the awesome stimulus packages of the recent past.

Austerity is very in vogue across the globe, and its promoters currently enjoy the moral high ground as most major governments around the globe are under intense pressure to remove government spending support from their economies. This could lead to one of the largest contractions in government support in decades. World governments are now focused on raising taxes on income and consumption on top of poorly targeted expiring stimulus packages expected to sap 1.3% from American GDP in 2011, a figure that could rise considerably if Congress were to prevent the extension of George Bush’s tax cuts. Globally this theme will result in a roughly 1% reduction in GDP,the biggest synchronized budget contraction in at least four decades.

Investors are now recognizing that their past fears of inflation were unjustified, rather the much darker enemy -deflation – is spreading through the economic system like a cancer sickening the already weak balance sheets of consumers whom were just beginning to believe the growth story world governments have been promising. Central planners missed by a country mile the only stimulus package that could have simultaneously addressed devastated consumer balance sheets and those of banks – a rebate to every American household of the federal taxes it had paid over the past three years, with a requirement to pay down household debt with 50% of the rebate.

The total costs of this type of stimulus would have been less than what has been expended to date to prime the banking system pump while completely ignoring the stalled consumer pump. Think for a moment how such a stimulus package would have affected your financial situation. Each and every taxpaying citizen would have received stimulus either permitting them to whether the storm, or to opportunistically invest in the very asset classes that have devastated so many households.

The labor department just released data suggesting that the current job market has suffered losses that are triple as much as what occurs at the lows of average recessions/job loss cycles. More importantly this data provides further evidence that the current economic recovery has begun to cool, this will have an impact on future consumer spending at precisely the time governments embrace spending cuts.

Globally the picture is generally the same, governments embracing austerity and considering raising taxes to shore up their own balance sheets, banks are largely insolvent with little incentive to risk capital by lending it to consumers who may not be able to pay it back given the impact of job losses and depreciated household balance sheets.

Investors begin to focus on stock market technical indicators when the fundamental indicators fail to generate any enthusiasm for investing. Yes, markets are probably oversold; however some of the greatest declines in history came from oversold levels. In fact we just got another bear market confirmation on Friday from Dow Theory where by both Transports and industrials hit new lower closing lows, and the 50 day moving average has just crossed through the 200 day average in the S&P – what some technicians call the Death Cross, a very bearish indicator that will likely have the S&P below 875 and the industrials below 8500. Alpha Fiduciary currently follows three of the most well respected technicians whose expectations range from negative to catastrophic.

While the only thing worse than writing these thoughts is reading them, take comfort in knowing that you not only know “you are here” but that Alpha Fiduciary as your guide invests its clients across ten diversified asset classes and has developed unique selection criteria to optimize the results derived from each asset class versus its benchmark. We also enjoy the freedom to express each asset class in the direction our vast research and technical work has determined prudent.There has never been a better time for our tactical, directional investment approach toward risk reduction, and opportunistic allocation of our client’s portfolios.

We are particularly excited to announce that we have recently succeeded in having our investment models adopted onto a top notch 401K retirement plan platform. If you would like to explore how this development can help you manage your retirement plan assets through the aforementioned environment, please email Mike Shea at Michael@alphafiduciary.com.

Be Well.

For more info about Alpha Fiduciary and how we manage wealth goto: www.alphafiduciary.com

Frequently Asked Questions

  1. QUESTION:
    whats the best investment right now for 401k through merril lynch?
    I’m currently 20 yrs old and im trying to find the best way to invest for my 401k retirement .My company is through merrill lynch below are the investments offered below. I work at macys and they only match 10% of what i make .thank you for reading my question and please dont write any mean comments im only young and trying to invest earlier so that when im older i can retire with full satisfaction thanks for your time.

    investment Type Symbol Price
    STABLE VALUE FUND

    STABLE VALUE FUND Core FDFXINC .52
    EQUITY/STOCK

    TARGET 2005 RETIREMENT TRUST Core TRT05 .44

    TARGET 2010 RETIREMENT TRST II Core TRT10 .26

    TARGET 2015 RETIREMENT TRST II Core TRT15 .06

    TARGET 2020 RETIREMENT TRST II Core TRT20 .81

    TARGET 2025 RETIREMENT TRST II Core TRT25 .58

    TARGET 2030 RETIREMENT TRST II Core TRT30 .36

    TARGET 2035 RETIREMENT TRST II Core TRT35 .19

    TARGET 2040 RETIREMENT TRST II Core TRT40 .19

    TARGET 2045 RETIREMENT TRST II Core TRT45 .18

    TARGET 2050 RETIREMENT TRST II Core TRT50 .20
    TARGET INCOME RETIREMENT TRST Core TRT00 .68

    S&P 500 STOCK INDEX FUND Core FDSP500 .54

    SMALL / MID CAP STOCK FUND Core LFCORE .23

    INTERNATIONAL STOCK FUND Core AIEF .31

    MACYS STOCK FUND Core FDSTK .53
    SELF DIRECT BROKERAGE OPTIONS= what exactly is this and does it benefit me?

    SELF DIRECT BROKERAGESM OPTION=what exactly is that and does it benefit me?

    • ANSWER:

  2. QUESTION:
    my employer is not depositing my 401k money I have taken out of my check. Merril Lynch says nothing they can?
    It has been almost a year since a deposit has been made. This is not just my account, but everyone at work. Merril Lynch says they cannot do anything, they are only the custodians. We were also promised a 1-2% employer contribution, which hasn’t happen in several years.

    • ANSWER:
      If your employer is taking money out of your check as a 401(k) contribution and not depositing it in the 401(k) plan by the 15th business day (usually around the 20th calendar day) of the following month, they are in violation of the law.

      You should contact the Department of Labor’s Employee Security Benefits Administration (DOL/ESBA): http://askebsa.dol.gov/

      They will not give your name to your employer when they investigate……they will just say there has been a complaint.

  3. QUESTION:
    I have an old 401k (just over K) should I roll over to a 457 with no matching or an Roth/Trad IRA??
    I already am invested in my current companies 401a plan (5 1/3% of paycheck goes towards this) but it’s time to start putting more towards retirement. (I’m 34).
    6+ years ago I left my job in which I still have just over K in their 401k with Merril Lynch. Well it’s been long enough and I need to start doing something with that money. My options… roll it over to my current companies additional deferred compensation/457 plan but they do NOT match contributions or I can roll it over to, I assume, a Roth IRA or Traditional IRA correct with my bank/credit union or another financial company (if bettter deal). Where is the best place to put this K where I can also invest more of my earnings (perhaps another 5% of my pay check right now).

    • ANSWER:
      a rollover is NOT a contribution – no company will EVER match funds that are rolled over, only contributions that come directly from your paycheck – roll it into your new 401k or a regular IRA – NOT a Roth IRA – you’ll lose 25-35% to penalty and taxes if you do that

  4. QUESTION:
    What should I do with my old 401k?
    I have 3 old 401k’s. I’m 30 years old. I have left them in their original accounts untouched, but am ready to do something with them.

    I can:
    a) Roll into my new company’s 401k (a company I plan to be with for a long time)
    b) Roll into an IRA
    c) Go see a financial advisor like at my local Merril Lynch office

    Option ‘a’ seems easiest to complete and easiest to manage. The only downside I can find is that I’m limited to the investment options they offer, but I’m ok with that. Any other reason why I shouldn’t go with option ‘a’ and instead should go with one of the other options?

    Thanks!

    • ANSWER:
      I think your best option is to roll them into an IRA account. That way you have total control over your options and I might add a much wider variety of options. I do not think I would ask anyone at Merrill Lynch for advice. They went bankrupt more or less. You can set up an IRA at a stock broker or at a mutual fund. Which you choose will depend on how much control you wish to exercise. The most flexibility would be offered by an on line broker such as Scottrade or TD Ameritrade. But if you do not wish to have to make a lot of decisions on what to invest in, then consider T Rowe Price, Fidelity, or Vanguard.

  5. QUESTION:
    What are some good IRA companies?
    I’m 30 and going to be rolling over my 401k accounts from former employers. Some people say I should roll them into an IRA account. What companies do you reccomend I use to do so?

    Vanguard? Fidelity? E-Trade? T-Rowe? Merril Lynch?

    Looking for a solid company with lower fees but good returns and a good website I guess.

    Thanks!

    • ANSWER:
      to add to what Jif said: Vanguard, T. Rowe Price and I think Fidelity also have brokerage accounts you can use for an IRA.

  6. QUESTION:
    Please explain a 401k…?
    I’m not sure if my job matches yet or not.I know they go through paychex/merril lynch.I am 37 make approx. 0 per week and was planning on 5% of my pay investing into it.Now if the funds that are 3-5 stars on the moringstar ranking the funds I should put a higher percentage in??? I believe i have 8 funds to choose from to put various percentage of my investment in ea one.Is 5% per check for the next 30 years making approx. 0 per week going to afford me enough to retire at age 67?

    • ANSWER:
      401ks are very risky investments for your retirement. They have been exposed as too risky by Time Magazine. You should not rely on a 401k for your retirement. But if they are matching you, you have to take advantage of the free money. Put your money in an ultraconservative balanced fund such as vanguard wellington.

      I wouldn’t go off and start buying mutual funds right away until you know more about them. You must do your research on these funds first!! They may not be suitable for your risk tolerance. You want to have a diversified portfolio of domestic and international stocks and bonds. Some of those funds likely overlap so you must find out what type of stocks and bonds are in those funds. A place to go to help you out is morningstar.com discussion forums. There are some really smart people there who can help you out a lot. Just put a question up on the mutual fund board. Whatever you do, do not buy anything until you research those funds. A lot of times 401ks have real dogs in them.

      Basically, my advice to you is to stay conservative with your 401k. 40 bucks a week will not get you enough for your retirement most likely. If they match you, contribute the max until they stop matching you. Open a ROTH IRA also, ROTHs are more flexible as you can invest anything you want. But whatever you do, do your research as you cannot just buy and forget in these markets anymore. Times are dangerous and even if you ahve a long time horizon it just increases the chance of your portfolio tanking in another market meltdown.

  7. QUESTION:
    Should I re-allocate my 401-k?
    I am a young investor ( 29 ) and currently I have my 401K plan heavily weighted towards equity. It’s about 80% equity ( 40 international and 40 domestic ) and 20% in multi-sector bond fund. Recently there have been indicators that the market will go through a “correction” and Merril Lynch inssued a whole house sell order and advised it’s clients to reduce there equity holdings. If there is a correction I will certainly have time to ride it out being only 29, but if I move to safer waters for the time being and then move back towards equity once the market has stabilized, I stand to come out ahead. That is my thinking anyway. Am I mistaken?
    I apologize, it was not Merill, it was the other big M. Morgan Stanley.

    http://www.newsmax.com/money/archives/articles/2007/6/8/163426.cfm

    *****************
    “Morgan Stanley issued a “full house sell signal,” saying three of its leading indicators – bond yields, Institute for Supply Management new orders, and valuation and risk – showed it was time to sell. MarketWatch reported that analyst Teun Draaisma stated in a European strategy research report that, “Such a full house sell signal across these three indicators is rare and has occurred only five times since 1980.”

    • ANSWER:
      Depending on what equities, mutual funds that you hold, it sounds like you should be fine. A 401K is a long term investment and you don’t hold equities for the short term, but for a long time horizon. You should be 80% equities until you are in you 40’s and then start to move them around.

      I am a financial advisor at Merrill Lynch, and we have not said ANYTHING about selling equities. The RIC report (one of out top analysis writes the report) said that we should be buying equities. We are moving into large cap core growth stocks, trying to pull some money out of china because of the volatility, staying away from small cap growth, (buying small cap value if you can finds a value stock in small cap), health care index, industrials, and also making sure that we hedge bets.

      I think that with the market volatility in the US, we will see, and have seen historically, the large cap out perform. Most, if not all firms, are still generally bullish on the markets, but with a strong hedge in place. We are moving funds around to “protect” gains if the market turns suddenly, but over all, we are still bullish. I have seen a lot of mutual fund managers going into large cap value, and not large cap growth.

      However, with a 401K, you should always re-balance, to make sure you funds are never outweighed, and stick to your LONG TERM goals, and not worry about short term. Hoped that helped.

      ****** MORE INFORMATION***

      When looking at an article like this, you need realize that the media blows everything out of proportion. When there is something good, they talk a little about it, and when something small is said, they make it seem like the world is going to end. If you invest
      CORRECTLY, I think that you will be fine. Be a smart investor, and don’t “follow the crowd”.

      ***Something that I got from JPMorgan Case this Monday*****(meeting with a VP and regional manager)

      Since the low in 2002 the S&P average stock is up 167%, the S&P index is up 98%, High beta stocks are up 264% (over 1.5), low beta stock are up 146%, dividend paying stocks are up 146% and non dividend paying stock are up 221%.

      Now with that said above…..and you know what happened in 2000, 2001, and early 2002…..

      52 billion people pulled money out of fixed income in 2000 (late), and 126 billion people put there money into growth stocks in late 2000……from 2000 to 2002 the markets were down over 50%.

      In 2002, and 2003 (when the markets started to make this big move), the US equities had there lowest years of investor (15 years period) of 43billion, and 41 billion.

      People buy at the high, and sell at the lows. The major reason why people make these moves is because of the media. I am not telling you to buy/sell, but do your due diligence.

      Back to the 401K, it is long term, stocks have shown, in the long term to be very profitable. You never want to “time” the market, be a smart investor. I would never SELL, SELL, SELL the equities market. That is just dumb….

      In your other accounts you can always put in stop loss orders to capture your gains, or limit losses, move to a “daily step up” variable annuity (5 year), so that you will NEVER need to worry about you downside risk. (Prudential has a great daily step up).

      Bottom line is be a smart investor, and don’t believe everything you read.

      Sorry it was long, I hopped that helped.