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The 401(k) 10% growth myth

The truth behind investing

Ever wondered why your 401(k) doesn't seem to really grow like you thought it would? Except of course by your own contributions that is! The chart below shows $100,000 with no additional contributions.

As shown at forecast-chart.com. It is not uncommon to see two poor performance years in a 10-year cycle. Even though the above hypothetical chart shows you effectively had an overall 80 percent collective growth, just having a 40 percent total drop brought you down to a total average annual rate of return of 3.72 percent before expenses. According to Forbes.com the average 401(k) fund expense still exceeds 1 percent annual, which comes out on the good years and the bad.

If you are nearing retirement you should really consider options with less volatility that protect you from a market downturn. Not sure where to start? Call me at 858-707-4690 or, if you prefer, email me at cwilson@iquotesd.com for a free review of your options. Dow at 17,000. What's next -- UP or DOWN?

Submitted by Chris Wilson

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