what is up my fellow youtubers welcome back to MKchip money and life TV where
we talk about how you can improve your financial position career and life I am
Mike also known as MK the CPA and you guys know my sidekick chipper I'm here
is a video I'm super excited to share with you we're going to be covering how
you can pick the best 401k funds are the best 401k investments and your company's
401k plan just so you guys know this is going to be the first video in a series
that I'm producing on this so kind of think of it like a class so in this
first video what I'm going to do is I'm going to do an overview of the five
steps and then in their videos after this we're going to go into detail in
the tutorial type of fashion where I show you how I go about doing each step
so that you can mimic my process if you choose to do so
alright guys and with that being said let's dive right into this so most of us
have heard I'll kind of have an understanding of what a 401k is right I
mean it's where you put part of your income into this retirement plan or
basically we are deferring our income for a later time period and when
we defer our income we don't have to pay tax on that money yet so the idea is
guys as you've probably heard instead of being able to invest only 75 cents after
taxes because we're deferring our income were able to invest a whole dollar at a
time and so with that whole dollar you know we're able to buy more units or
shares of this mutual fund in other words we're able to let our money grow
quicker because we're putting we're able to put more in and then it's taxed when
we take it out at a later date and of course you guys probably know if we
invest in this thing in our 401 K for the next 20 30 40 years we should become
rich are very are wealthy enough to be able to retire we'll be they say will be
loaded in cash so much cash you'll be able to buy a boat
now there's only one little problem with this this whole investment idea in our
401k we don't frickin know how to invest hey school never teaches us how to do
any of this and yet we're supposed to rely on this 401k retirement plan for
the rest of our life are you kidding me so that is why I'm producing this video
is because I've come up with a process that has worked very well for me not
that you have to use it but I think it could help you by the way guys I am by
no means a professional investor and so please do not take this as legal or
investment advice however by using this process I reallocated my funds at the
end of 2016 are towards the end of 2016 and so far just in this year alone in
2017 for the first six months I'm already ahead 20% on my 401k investments
and it's the best my plan has ever done so I think this process could work for
you or at least hopefully help you get better returns in the future so since
school didn't teach us what else can we do to learn about our 401 K investments
let me think for a second oh I know we know talk to the financial advisor
that comes to our company thanks know what I'm talking about
it's that person who comes to your company or organization usually every
four months to give you a market update or when the markets really taking a dive
they comes in well we can ask them right we can ask them to choose then best 401k
investments for us can't we actually we'd be completely wrong if we were to
assume that the financial advisors have a thing called a liability although they
can advise us and it's not a bad idea at all to talk to them and learn about the
funds in your 401k plan we cannot expect them to pick the investments for it both
of them will not because if they say ok well you invest in a B and C and then do
nothing else well what would happen is if later on 30
20 30 years down the road you're full on key investments tank well then that's
going to open them up to liability this video is about choosing and picking the
best or m'kay investments this is truly about us you and I picking our own
investment because nobody else is going to do it for us so we if we want the
best rate of return in our 401k plan and the best overall investing strategy
we're probably going to have to pull the trigger ourself we can like I said we
can bounce ideas off of them off to financial advisors but we still need to
be the ones in charge of this and with that being said let's start going over
the five steps to this investing process okay guys the first step to choosing the
best 401k funds in your 401k plan is to actually know what the funds are so the
first step is really fun choices it's knowing what funds are available for you
and I in our 401 k plans so how do we do that well guys what we do is if you
don't know where to go to learn about this first you need to go to I would
recommend going to a human resources department of your company or whoever is
in charge of that and say hey I want to learn more about my 401k plan and the
funds that are available in that plan can you tell me or point me where to go
so I can learn more about this and also after whoo-hoo therefore one key
provider for our company and just so you guys know if you don't know what a
provider is it's usually the plant administrator who's helping your company
manage their 401k plan and so some examples would be one John Hancock -
Vanguard are three fidelity those are some of the most common for 1k plan
providers in the nation so after you go and talk to your human resource
department what they're probably going to tell you is that there is a website
online for that provider so like you can go to Vanguard comm fidelity comm and if
you don't have an account created already you'll go ahead and you'll set
up an account and from there you can look in the website and find the area
where you'll see all the funds available to you each company an organization is
going to have a different 401k plan so your fun toys are truly going to vary by
the provider you're for 1k but also how your company
set it up and what in my example I have 60 choices available to me 60 total fund
choices in your plan you might have 100 choices or more you might have less than
50 it all varies based on your company and as you guys are doing this process
be thinking of having a pen and paper available that will really help so that
you can take notes as you go when you're doing your research i really suggest
using Microsoft Excel to do this because you can easily manipulate the data later
and that will help save you time going forward now you're probably thinking Oh
Mike if there's one hundred fun choices how long is this kind of take me is it
going to take me all day well you know this could take you a couple hours guys
but it is so worth your time to do this you think of all the years we've been
working for a money and if we're not trying to get the best return on
investment it can literally cost us hundreds of thousands of dollars by not
taking the time to do this so we need to freak and do this and do it right are
the best we can what I would recommend doing because
this is going to take some time is break your research into one to two hour
chunks and then come back at later time and do some more all in all this might
take you a couple hours I don't think it's going to take you more than ten
hours to really go through all of your funds but I would take the time to learn
how to do this okay on to the second step is criteria to narrow down our
search choices are in our research time required we're going to select some
criteria in that crate because we don't want to be spending the rest of our life
researching 401k funds none of us want to do that it is not very fun it could
be interesting for some people but it's not the thing you want to be doing at
the end of the day all the time and so we're going to pick criteria that's
important to you you know like for example criteria that's important to me
is I want to know the fee structure the fee ratio of each fund I want to know
what funds have been around over ten years and of the funds that have been
around over ten years who is performing the best over a ten year period
consistently those are the funds I usually start to target so if you have a
hundred funds in your 401k plan by selecting specific criteria we're going
to try to narrow those down for you so you're really only a research
maybe 25 out of the hundred funds that way it's going to save you a lot of time
and then after the process after you filtered through this process we want to
find what we believe to be the top 10 or 15 funds in your entire 401k plan and go
from there okay step three is an obvious one but we need
to learn about the fund most people have no freaking clue what they're actually
invested in and it doesn't make sense to me but they don't even they're just
blindly investing and hoping that works out well we can't do that guys we cannot
get ahead financially or anything else in life unless we are truly intentional
we can't be slacking off at this you can usually learn the most about the funds
in your 401k providers website you can log into your online 401k account and
read about the funds you can see what companies the each of these funds hold
is if you don't know about mutual funds mutual funds are made up of individual
stocks so in a sense you are investing in individual stocks except it's all in
a group we want to learn what doesn't each one made up is it mainly made up
healthcare stocks is it mainly made up of blue chips is it made up of
technology stocks you guys get the idea so that's number three learn about the
funds as much as possible so that you actually know what your money's invested
in number four use free resources for your research there are so many free
resources available to us online we have more access to free information than any
other generation in human history so a simple one would be that I use a lot is
Yahoo Finance because these mutual funds have ticker symbols just like a stock so
you can go to Yahoo Finance put in that ticker symbol and you can see a visual
graph of its stock performance it's like a stock chart basically and you'll see
that in a future video and I'll show you how I analyze that you can learn about
the more about the company our mutual fund from that vantage point you can see
visually visually how it does and good times and bad and see if you would want
to own it plus there's other information on Yahoo
Finance that will be available about that fund and the great part is it's
easy to compare it to other funds on the same stock chart so I'll make sure to
show you guys that in a future video this one guys is pick
investment after we realized hey what funds are available in our 401k plan
after we've selected the criteria of what funds we're looking for or what we
want our funds to have after we've learned about the funds and after we've
used our free investment and resources to learn more about this and do our
analysis and research now we're ready to invest if you're already invested great
no problem because after doing this process you
might find hey I don't want to be invested in this anymore so instead of
investing in this I'll invest in that so you can then move your money out of that
fund and put it in another fund or you can just stop putting your cash to that
fund you already had and just redirect that cash to the new fund that way you
don't have to sell off your original investment if you don't want to but
we're going to go into detail about that in the future and if you guys have never
invested at all this is the perfect time to learn and not only do I do this
process for my 401k plan guys I use a similar process for my brokerage account
investments as well as my wife and I Roth IRAs so far it's been working for
us guys and I think it can work for you so give it a shot in 2017 I just wanted
to leave you guys with this it has never been more important to learn how to
invest then right now pensions are dead unless you work in
certain government sectors you're basically not getting the pension in
other words the company is no longer going to fund your retirement
unfortunately you and I have to bear that burden now and that's just the way
it is that's the challenges our generation faces so we have to learn how
to properly invest whether it's in our 401k whether it's a combination of our
401k investments or something else but we just have to learn to become
investors and like I said unfortunately school is not going to be teaching this
information anytime soon or ever I have no idea guys this is a great opportunity
to take control of your investments your future and if you guys can get higher
rates of return on your investment you can literally shave off years of your on
your retirement because your money will compound that much faster and so
hopefully the idea is you won't have to work as hard or as long the rest of your
life
alright guys make sure to hit that like button if you have not already I would
really appreciate your support if you have any questions or comments make sure
to leave them in the comment section down below I will definitely make sure
to respond your homework for this week I'm giving you a homework what so by
next week what I would like you guys they have find out what your fun choices
are and make a list of all of your 401k investments that's your homework for
this week and that will get you started you can help us promote financial
literacy and career and life success skills by thinking of just one person
who you feel could benefit from this information and by sharing this video
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video alright guys as always thank you so much for your support I love you I
can't wait to see you next week as we dive further into this process so that
we may choose the best investments in our 401k plan I hope you guys will stick
with me on this I really think it's going to be worth your time what guess
that I've already gotten a 20% return for the first six months of this year
and I think you guys can get higher returns as well I'll see you all in this
week's video peace
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