So most of us have a 401K plan. The 401K portfolio maybe our largest investment besides house. Yet after two brutal downturns from 2002 to 2003 and from 2008 to 2009 401K plan is under serious doubt/attack. I just don't know what could be an alternative (please don't say pension plan. Pension plan, which is kind of like social security, is a ponzi scheme.)
This brings us back to yesterday's entry, there is no need to replace 401K plan, instead there should be low cost ETFs or their peer mutual funds available for 401K investors to select. I haven't done a thorough study on the 401K investment option but I believe the low cost ETF portfolio we constructed in last blog provides a better option than what are available today on majority on the 401K plans out there. It's a shame the FinReg bill doesn't address this issue.
What can you do then? Well, first you could still construct a portfolio with the similar asset allocation as the low cost ETF portfolio has, albeit suffering higher expense cost, with the selection that you have been dealt in your 401K plan. Second you should call your Senator and Congressman to ask them to do something about it, to force employer/401K plan provide to provide the lost cost option.
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