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Business: Investors brace for poor 401K results
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By LISA SINGHANIA, Associated Press
(January 12, 2001 5:44 p.m. EST http://www.nandotimes.com) - The stock market's slide will become painfully clear to many ordinary investors when they get a look at their end-of-the-year retirement account statements this month.
"I'm anxiously waiting and quite nervous," said Mary Enright, 41, a software tester in Sioux Falls, S.D., who expects her retirement nest egg, contained in a 401(k) account, to be off 15 percent.
"I went through the slump in the late 1980s, and I've made it back and then some since. But it still is going to be very hard when I see what the actual results are."
Americans had more than $1.5 trillion invested in employer-sponsored retirement plans as of 1999, the most recent figures available from the Investment Company Institute, a mutual fund industry group. About 60 percent of people participating in employer plans had no other stocks, mutual funds or bonds.
After one of the worst years ever for stocks, most investors will see more losses than gains in their statements.
Many of the highest-flying tech stocks of the last few years ended 2000 off more than 50 percent; blue chips fell more modestly. Mutual funds reflected those losses.
"Some 401(k) investors clearly are going to see, for the first time in quite a while, a lower than expected return," said Sean Hagerty, principal for the Vanguard Group's 401(k) group.
His group is preparing for up to 25,000 calls daily this month compared with the usual volume of below 20,000.
An increase in calls is normal this time of year as investors fine-tune their portfolios or invest year-end bonuses, but their concerns have changed, he said.
"A theme of the calls we're getting this year is, 'Do I have the right amount allocated to broad equity funds?'" Hagerty said. "A year ago, we were getting calls asking if we could offer funds that were heavier in technology."
Hagerty said the company has included messages in mailings and on its Web site throughout the year to educate investors about the stock market's volatility, so Vanguard hopes any losses aren't too much of a surprise.
Fidelity Investments said retirement-related calls and Internet activity jumped by as much as 75 percent in the first week of this year.
"Investors are asking us what the market is doing, will the volatility continue and what they should do," said Peter J. Smail, president of Fidelity Employer Services. "We stay focused on the same message: Volatility is to be expected, and that's the reason you take a long-term plan. Diversify your 401(k) account and don't try to time the market."
He said a recent Fidelity survey shows that 41 percent of its 401(k) investors plan to put more money into their accounts in 2001, reflecting optimism that the market will improve.
Neither Fidelity nor Vanguard reported investors switching out of stocks into money markets or more conservative bonds, although some people are adjusting their portfolios away from technology companies.
That forgiving attitude appears to be shared by many investors, though swallowing losses of 10 percent, 20 percent and 30 percent won't be easy.
"If you're in the market for the long run, you'd be a fool to pull out now," said Nicole Demakis, 37, a San Diego lawyer, who hopes her 401(k) losses don't match the 40 percent decline in the rest of her stock portfolio. "I think the market is going to recover."
-- kevin (email@example.com), January 13, 2001
Lets see now - 1.5 trillion,a 15 % loss.How many Billion was just pocketed by the robber barons????????????
-- jax (firstname.lastname@example.org), January 13, 2001.