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Par tech 401 K retirement plan: Online chat | My lessons learned

Dec. 8, 2021

Introduction

I did not spend any time ( less than 60 minutes) from 2010 to 2018 related to my 401 K plan with par tech. I found out my mistake until November 2018, and I missed SPX 500 gain 300% from 2007 to 2018, and my account has balance around $8000 dollars with annual gain 1% from 2007 to 2018, and I learned that it is life and we all live once, and we have to live and learn, and share with others to build a good community around us. 

My chat | Message center | Charles Schwabs  

Chat Started

11:41 AM

Getting Connected

11:41 AM

RPS Team Connected

11:41 AM

RPS Team

12/8/2021 Schwab Retirement Plan Services, Inc. provides recordkeeping and related services with respect to retirement plans and has provided this communication to you as part of the recordkeeping services it provides to the Plan. Trust, custody, and deposit products and services are available through Charles Schwab Bank. ‎2020© Schwab Retirement Plan Services, Inc. All rights reserved.

11:41 AM

Kelley W Connected

11:41 AM

Kelley W

Hi Jianmin, how are you today?

11:41 AM

JIANMIN

very good.

11:41 AM

Kelley W

Good to hear! I see you have some questions about the advisory fee on the plan, is that correct?

11:42 AM

JIANMIN

Yes.

11:42 AM

Kelley W

So what exactly is your question about that advisory fee?

11:42 AM

JIANMIN

I do not have to pay fee before, but last 12 months the fee came out. What is the trigger for this fee? How to avoid if possible?

11:43 AM

Kelley W

Let me take a look and see when that fee changed and the plan started implementing it.

11:44 AM

JIANMIN

Sure.

11:45 AM

Kelley W

Ok, so it looks like a notice was sent out on 2/27/2020 that the fee structure of the plan had changed and was effective as of 4/1/2020.

11:49 AM

JIANMIN

So can I make the change, invest once a year instead of multiple times and pay advisory fee multiple times.

11:51 AM

Kelley W

The overall reason for the fee change was for transparency. Fee had always been paid by the plan participant, but in a different manner. As of 4/1/2020 there is a separate recordkeeping and investment advisory fee which is charged to your account. But there is also a credit back into your account for any funds you're invested in that may result in revenue sharing.

11:51 AM

JIANMIN

I mean those dividends are got charge so many times.

11:51 AM

Kelley W

The changes are for all plan participants and you are unable to reduce or eliminate those fees.

11:52 AM

JIANMIN

I mean that there is option to leave dividend not invested, so that dividends can be kept in money market first, if needed, I will make purchase manually.

11:53 AM

Kelley W

So whenever you see an Investment Expense Reimbursement, that is the fund giving you money back for expenses. Before you didn't see that on your account as it just reduced the fee. Now you see how those reimbursements and the fee.

I am not sure I understand you question about leaving dividends uninvested.

All dividends are invested into the fund they originated from, there is not a way to change that within the 401k.

11:54 AM

JIANMIN

I see. I also noticed that I have small balances for a few funds, less than $10 dollars, how can I clean those funds and avoid fee?

11:55 AM

Kelley W

So there are no fees associated with placing investment transactions on the account. You can place a rebalance or you can place individual transfers from those funds with residual balances into another fund.

11:58 AM

JIANMIN

Thank you for the answer.

How many times I can do rebalance in a year?

11:58 AM

Kelley W

There are no limits on rebalances, but there are 3 funds that have trading restrictions. Meaning if you sell out of them you will not be able to do a rebalance or transfer back into those funds for 30 days. So if one of these restrictions is triggered you will not be able to rebalance the account until that restriction is lifted. You can place individual transfers into other funds during that time though if you want to make changes to your investments.

12:00 PM

JIANMIN

Just double check: advisory fee will get reimbursed based on your following statement:

So whenever you see an Investment Expense Reimbursement, that is the fund giving you money back for expenses. Before you didn't see that on your account as it just reduced the fee. Now you see how those reimbursements and the fee.

12:01 PM

Kelley W

Yes that is right. You will now see those fees and reimbursements on the account whereas before you did not.

12:03 PM

JIANMIN

Do you know how often the reimbursement will happen? How many times in a year? I did see once but I forgot without your remind.

12:04 PM

Kelley W

Based off the account history it is likely this will occur quarterly as that is when plan fees are applied the your account.

12:05 PM

March 2 2020 Par 401 K market change

March 2, 2020

It is time for me to record market change on this day.

Actionable items

I had this 401 K account since I worked for par tech in 2007. My original deposit is $8000 dollars. I made mistake to time the market, and sold all assets in 2009 and put them in money market.

I never spent any time to review and learn something from 2009 to 2019. I noticed one time the market change was up 40% in 2010 when I started to work on my current job.

I didn't know why I made such bad choice, and I had such bad decision making, bad economy behaviors. Even though those are common mistakes, I learn that it is my job as an adult, learn every day about business. I should learn finance literacy by myself.

Par 401 K - remember Feb 24 2020

Feb. 24, 2020

Introduction

It is the challenge job for me to learn how to invest my Par 401 K. I like to remember my short two year work experience to work for Siva and Par tech. I like to grow my finance IQ with my account.

Feb. 24, 2020

I just spent a few minutes to look into Charles Schwab's web page. I found this page by choosing a few configuration options.

$100,000 US dollar loss from 2010 to 2019 - understand asset allocation

Jan. 26, 2020

Introduction

It is time for me to look into asset allocation. I did have some problems to deal with my emotions back in 2009, and then I decided to move my 401 K par tech into money market fund, and also my IRA to Amtrust bank CD. I did not work on review of my portfolios from 2010 to 2019 near 10 years. I like to catch up with more reading here. 

Asset allocation

There are two big points to understand here when it comes to choosing an asset allocation.

First, if you want to reach for higher returns, you’ll have to choose a more aggressive asset allocation that comes with a lower level of certainty about whether you’ll actually get those returns.

If someone is telling you about a way to get higher returns without increased risk, then they’re selling you something that doesn’t exist (unless they’re talking about simple diversification).

Second — and this is a point that’s often overlooked — certainty about returns brings its own set of risks. This is why I say that risk is a strange word when it’s used in the context of investing.

With a savings account you can be certain of your balance from day to day, but you’re running the risk that the value of your money will decrease due to inflation. Over short periods of time this isn’t a big deal. But over long periods of time it matters a lot.

This is the main reason why people suggest that long-term investors put their money into riskier investments, like the stock market; there’s actually risk on both ends of the spectrum.

So, here are two things you’ll want to keep in mind about risk and return when choosing your asset allocation:

1. If you want the possibility of higher returns, you’ll have to accept more uncertainty about whether you’ll get them. That’s the trade-off that comes from putting a higher percentage of your money in the stock market.
2. Over the long-term, there actually IS risk involved with even “low risk” investments. That’s why you’ll likely want a significant amount of your long-term money in the stock market.

I just copy the content from the article. 

My retirement life will be super challenging

January 15, 2020

Introduction

It is my personal finance research. I like to write a blog called "My retirement life will be super challenging".

My 401 K and IRA / Risk management

I just had 53 year old birthday in Oct. 2019. I also learned that I had economics behavior problems. I did not spend time to learn how to invest from 1996 to 2018 December, so I left my USA 401 K and IRA accounts no change from 2010 April to 2019 April, capital preservation for Par tech 401 K and IRA CD in Amtrust bank. I will definitely take the consequence, and I will definitely have very challenging life after I retire in Canada.

I was smart to invest my own 401 K for three jobs as a software engineer from 1999 to 2001, Online gaming system, Trendium inc, and then from 2006 to 2007 Par tech inc. I invested IRA one year in 2005 as well. So I invested over $22,000 US dollars.

If I did not close all my funds and then put into IRA CD from 2006 to 2009, my retirement fund will grow with US S & P 500 Index, those over 10 years will create more than three times more market change, over $66,000 US dollars. I just could not believe that my huge mistake and I have common mistakes called recency bias, and paralysis by analysis.

But I got lost in my busy life to learn how to handle my money properly. I did not spend time to learn until I felt depressed in November 2018. Since I could not solve my own housing problem in Canada, I only could save a down payment less than 20% after I worked 10 years full time.

I have to figure out how to catch up, and push myself to learn as a self-learner.

Actionable Item

I learned from MIT open course Andrew Lo, finance introduction, time and risk management are two things to make finance really hard. I messed up two things, one is 20 years time, one is risk management from 1999 to 2019. What should I do next?

I have $9000 Canadian dollar RRSP, and less than $30,000 US dollar IRA and 401 K. I had 53 years old birthday in Oct. 2019. How can I make a living to use those small amount retirement fund?

Make sure that I will work on something meaningful, help myself and also share my struggle and hard work journey as well. I may need to work on research about social service, social housing, and gain more skills like living in rural area and small cities.

Case study: Par 401 K 2010 - 2019 TRBCX return

January 4, 2020

Introduction

It is my project management skills. I have to learn how to cover most important projects in my life, like management of my 401 K with Par tech inc from 2007. I did not spend time at all from 2009 to 2019 January, and I like to write a short case study about TRBCX fund in my Par tech 401K.

Case study

I invested $8000 US dollars in 2007 in my 401 K. And I like to review TRBCX fund in my Par tech 401 K.

Here is TRBCX fund's page.
I worked on my 401 K par tech in May 2019. I set up portfolio with 30% bonds, 70% equity. I like to work on calculation of return if I choose put all $6,000 dollars into TRBCX fund.

Here is Bankrate.com calcultor I like to use. What if I put all those $8000 dollars into TRBCX from 2017 to 2019.

From the above tables, using 15-year trailing return 11.04%, and then fill the form on bankrate.com webpage, the following is the copy of bankrate.com screen. The form can be accessed using the link here.

Actionable Items

In reality, my 401 K par tech has only less than $7000 US dollar balance. I did write blogs to show the summary. Here is one of them.

I need to work on a few things in order for me to understand the above optimal solution.

1. Be confident on self-learning on investment;
2. Work on asset mix, asset allocation. Best way to learn is to read a book, such as Boglehead investment. I should slow down everything, church, tennis, sibling chatting, shopping. I have to learn basics as early as possible;
3. Keep reading articles, learn every day on how to invest;
4. Learn to find tools to help me manage portfolio 10 year return;
5. Understand my goal, I do not need to use those 401 K money from 2006 to 2019. Why I do not take risk and let fund grow by allocating equities into the fund.
6. I have to keep reading and learning. I should keep a journal of my study.
7. Build a community around myself, how to invest, talk about investment, and also try to be a millionaire, instead of worrying about immigration, work permit, full time, or other things.
8. If I have full time job, then I will keep making money; if I do not have full time job, then I should invest those time to learn investment, personal finance. So much to learn, so little time to work on my goal.
9. Learn how to manage myself, stay confident.
10. Take some risk in investment.

So the difference is more than $21,000 US dollars. In other words, if I control my emotions, keep the portfolio in 2009, then I will have return up to $21,000 US dollars. In 2009, I took $30,000 from my Amtrust home equity line from 2008 January to 2009. I did review and then found records I transferred $30,000 US dollars to my Chase bank checking account.

Life is such challenge to live, at that time, I was so afraid that Amtrust bank will take back home equity line. I also kept over $15,000 IRA into IRA CD account.

To be a self-learner, it all starts from reading an investment book; My FAU classmate told me to invest on index fund. At that time, I was so busy with so many things. I do not have to spend money to take a course, I just read the book, write down what I learn, and continue.