Author Archives: Jordan Nietzel

Jordan Nietzel
Jordan Nietzel is the Director of Investment Operations at blooom. He has spent the entirety of his career in financial services helping individual and institutional clients achieve their financial goals. Jordan is committed to delivering sensible investment advice in a way that is simple and easily understood.
A Penny And 401k Fees Both Overpriced

Penny for Your Thoughts: You Pay More For 401k Than You Think

The U.S. Government has recently engaged in serious talks to abandon the production of the penny. Why? Because each penny costs 1.4 cents to produce, resulting in a cost of more than $100 million per year to taxpayers. If you’re a 401k investor, does this sound familiar? How so, you ask? The answer lies in knowing how much you’re paying in the hidden investment fees associated with your 401k account. Based on NerdWallet research, nearly 92% of people have no idea what they’re paying in 401k fees.

Why Paying 401k Fees Can Be a Big Deal

Fees unnecessarily sap the potential long-term results of your 401k. The average American will pay $138,336 in 401k fees. That’s 2.5 years of earnings for the average U.S. household.

Want to see the fees you could strike from your life? Check out our hidden fee calculator to get an estimate. Or, evaluate your actual account for a truer picture.

Read More
Eggs Need Diversification Beyond One Basket

Why Diversification Matters in 401k Management

“In the world of investing nothing is as dependable as cycles” – Howard Marks, Oaktree Capital chairman

We want to illustrate the randomness of markets and why diversifying is a good idea.

We put together the following chart to do just that. It shows the performance of several of the major asset classes over the last 10 calendar years updated through 12/31/2016.

Diversification - Asset Category Performance

A Few Things About Diversification Jump Out

While US markets have rebounded strongly since the global financial crisis in 2007-2008, international markets have lagged for the most part. Unfortunately, this is causing a lot of investors to abandon their international funds or avoid them altogether. If we extended this chart back a few years further, the opposite would have been true. Another reminder that markets are cyclical. Nothing new to see here.

Poor commodities. They had their first positive year of the past six years in 2016. Even after that gain, the asset class is down around 50% since the beginning of 2011. Commodities still have a place in a diversified portfolio, but if you have been banking on the return of the gold standard, you have likely been disappointed.

Looking only at this chart, bonds seem to be a dependable source of a decent return. However, like all history, context is everything. We’ve seen a 30-plus year bull market in bonds where the 10-year treasury yield went from over 15% in the early 1980’s to around 2.5% at the end of 2016. Falling interest rates are a positive for bond prices, but they can only fall so far. The next decade will likely look different for bonds.

The Diversification Chart Teaches Valuable Investing Lessons

First, there will be up years and down years. Chasing the best performing asset class of the previous year won’t yield great results. Oftentimes, the top performing asset class one year will be near the bottom of the pack the next year, and vice versa. Other times, an asset class’ relative performance will persist (see: commodities from 2011-2015 or US large cap from 2013-2016). The point is, the future is unknowable.

If you’re relying on your (or anyone else’s) ability to time the market, you’re doing it wrong.

Read More