Same Funds; Different Outcomes: Add This Tool to Help Reallocate Your 401(k)

Want to potentially increase the returns in your retirement account at work, but keep the same funds? Well, that’s possible.

In a previous blog I described a tool we show clients to help them navigate when to rebalance their retirement account at work – whether it’s a 401(k), 403(b), 457, or TSP. The program, 401(k) Optimizer, reviews your risk profile, then recommends how to allocate your retirement account. It also lets you know when it thinks you should make changes, like moving out of the market or into another area of the market. The program is managed by third-party money manager, Howard Capital Management (HCM), using their research and expertise to make the calls.

So why do I like it? Because historically, those folks have made some pretty good calls (as in 2008 and 2020).

Let’s take a look below at how one popular S&P 500 index fund performed on its own compared with the investor taking direction from HCM-BuyLine, and then a popular growth fund. The blue line is the fund, red line the S&P 500, the green line is the fund using direction from the HMC-BuyLine.

In the above picture, the red line and the blue line overlap, which makes sense – the blue line is the index fund; the red line is the S&P 500, so you can’t see the blue line. But the green line is the same fund, just using the HCM-BuyLine for guidance on when to move in and out of the fund.

The next picture shows the outcomes using the growth fund. Green wins again.

In either case, which balance would you rather have after 10 or 20 years? Again, same funds, different outcomes. Obviously, historical performance is not a guarantee of future results, but looking at these two examples (which I chose at random) it’s not even close.

I invite you to test your own funds at https://www.howardcm.com/our-investing-approach/hcm-buyline. Then, if you’d like to explore how we can help you add 401(k) Optimizer to your toolbox (maybe even using our promo code to test drive it), reach out to us at maynardwealth.com.