# Step By Step: Changing My 401k Investments on Fidelity NetBenefits

Back in 2008, When I was a young spry 25 year old, I opened my first 401k at my first professional job at AOL.  I remember selecting the “aggressive investment” option back then and then I forgot about it for 10 years.  I didn’t really forget, but I was too lazy to check on it.  But today’s the day, I will optimize it!

### Background Info

So I investing in this 401k from 2008 – 2010 and I remember having a 50% match up to 6% of my salary.  I’m pretty sure I put in the bare minimum of 6% to get that maximum match.  So 66.6% of the initial money was contributed by my salary and the remaining third was employer match.  Since then the 401k account was bounced around to different companies and now it seems to be part of Verizon.  It is operated by Fidelity Investments and seems to be invested 100% in a Verizon 2045 Retirement Mutual Fund with a 0.65% expense ratio.

### Step by Step: Switching 401k Retirement Investment

Login to Fidelity Net Benefits.  Do whatever you need to do to get the login and password.  You may need to reset passwords and/or contact your old company.  It also helps when signing up for these accounts, to use a personal email rather than your work one.  If you signup with your work email, then you will generally lose that email if you leave that company.  I had mine saved in a doc, so I didn’t have any problem logging in.

See what you got currently.  I got my $29,500 invested in Verizon 2045 Fund. Upon further inspecting, I see that it has a management fee of 0.59%. Not a complete rip off, but I would like to do better. #### Step 3: See What’s Available Here’s a screenshot with available funds I can pick. Some are not shown as it’s too much to show in a screenshot. There’s quite a few and if you don’t know what you’re doing, then that’s a lot of jibberish. Basically I have the choice to put my money in one or more of these funds. The performance of the funds are listed. I don’t look at these numbers really because I already know what I want. What I want is an index fund with a low fee. So let’s look at the fees tab instead. I can see the current investment I have of Verizon 2045 has a fee of 0.59%. If i scroll down, I see some interesting low fees. 1. Verizon Stock Fund: 0% 2. US Large Co Index: 0.02% 3. Small Cap Equity Index: 0.03% Once I click in, I can see that Verizon Stock Fund is a Fund to buy Verizon Stock. I definitely don’t want that as my investment strategy is to diversify my investments into several companies and not just one. The other two low fees is what I want. The US Large Co Index is basically a low cost S&P 500 Fund and the Small Cap Eqty Indx is basically a low cost index fund like the S&P 600. I’m very familiar with the tried and true S&P 500, but upon looking back at past performance, I’m very interested in owning some S&P 600. I’m also already so heavily invested in S&P 500 and some diversification is good for me. One thing to note is the very closely named US LARGE COMPANY vs US LARGE CO INDEX. This is the classic example of the active vs passive management fund. The US Large Company fund is an actively manage fund and that’s why it costs 20x more than the index fund. Remember, don’t invest in active funds! #### Step 4: Make the Switch So, for me, this time around, i’m going to take my money out of the Verizon 2045 fund and put it in the Small Cap Eqty Indx. I clicked “change investments”, and selected to sell 100% of my Verizon 2045 and buy 100% of Small Cap Equity Index. Done! ### How much did I lose over the last 5 years? I stopped investing in this account in 2010, so over the last 8 years, how did Verizon 2045 do vs the tried and true S&P 500? I can’t find or access the data for the Verizon fund for an 8 year period, but i know the last 5 years it returned 7.5% based on the given stats above and the US Large Co Index would have returned 12.95% Current Balance (2018):$29,500

Solving for initial (P)rinciple 5 years ago in the interest equation: $Amount = Pe^{rt}$

$\frac{\29,500}{e^{7.5\% * 5 years}} = \20,275$

Estimated 2013 Balance: $20,275 Now using the formula again and putting in the S&P 500’s return over 5 years: $\20,275 * e^{12.5\% * 5 years} = \37,878$ Estimated 2018 Balance if I switched to S&P 500 back in 2013:$37,878

What a difference a few clicks (and 5 years) could have made…  But I’ve made the change now and I got another 30 years til retirement!

Let’s go passive investing!