What to Do With a Fidelity 401(k) That is Losing Money?
Investing with a Fidelity 401(k) can be a solid way to plan for retirement, but if the account is losing money, further action must be taken. Fidelity is a leader in the retirement planning field and they are one of the most commonly used companies for hosting a 401(k). If your account is losing money, you may consider exploring your other options and try to find another strategy that is more profitable.
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Asset Allocation
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One of the variables that can affect the profitability of your 401(k) is the asset allocation. Asset allocation is the amount of money that you designate for each type of asset class. You may decide to allocate a certain percentage of your money to stocks and the rest to bonds. If you have too much money devoted to a certain asset class, it could affect the profitability. For example, if the stock market is performing well, adjusting the account to hold a majority of stock can increase the profitability.
Fees
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Another aspect that can negatively affect the profitability of your Fidelity 401(k) is the fees. You have to pay Fidelity fees to hold the account for you. If your account is consistently losing money, you could explore other investment companies to see if their fees are lower. If you are barely losing money, decreasing the fees could potentially make you profitable. Each investment company should have a fee schedule posted on its website that you can evaluate.
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Investment Performance
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Sometimes, your asset allocation is fine but you are involved in the wrong individual investments. For example, the stock market could be performing very well as a whole, but you could still lose money because you are invested in the wrong companies. By looking at the performance of your individual investments in relation to the whole market, you can decide if this is an individual investment problem or if the market is simply down. Spending some additional time in researching your investments could pay big dividends.
Rollover
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If you decide that the problem is with Fidelity, you could potentially roll your account over into another broker. This could help you save money on fees and find additional investment opportunities that are not available with Fidelity. When rolling over an account, your new broker will have a simple form that needs to be filled out. Fidelity will also require some paperwork to complete the transaction. Fidelity will then transfer the money to your new broker.
Maintenance
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Regardless of whether you decide to transfer your account to a new broker or stick with Fidelity, your account will require some maintenance. You cannot simply put your 401(k) on auto pilot and expect it to remain profitable. Looking at your account periodically to see how it is doing will help you stay on top of your investments. If an adjustment needs to be made, you can easily buy or sell a security to meet your investment goals.
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