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Deciding whether to invest in Merrill Lynch 401k
Old 12-30-2006, 04:41 PM   #1
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Deciding whether to invest in Merrill Lynch 401k

The company 401k plan funds with expenses listed below are rather high and trying to decide if it is worth investing. I will be maxing out the Roth IRA and looking for other Tax Deferred type options. Suggestions ?

Thanks

MerrillLynch Retirement Reserves .5%
BlackRock Fundamental Growth B MBFGX 1.90%
BlackRock Global Growth B MBGGX 2.18%
BlackRock Global Value B MBVLX 2.37%
BlackRock Global Allocation B MBLOX 1.86%
BlackRock Bond Inv B MBHQX 1.38%
BlackRock High Income B MBHIX 1.37%
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Re: Deciding whether to invest in Merrill Lynch 401k
Old 12-30-2006, 04:50 PM   #2
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Re: Deciding whether to invest in Merrill Lynch 401k

The only reason to invest in a 401k with these choices is to get the company match. Even then I'd look at putting my money in the ML Retirement Reserves. I'm assuming it's a MM fund paying about 4%. It sucks but you could use it as part of your "bond" allocation.

I'd also write a letter or email to the HR 401k contact and complain about the limited choices and excessive fees. Suggest they look into Vanguard or Fidelity.

I'll bet some "good ol' boy network" is in play here. I once worked for a company where our CEO got his Harvard MBA with someone that ran a mutual fund company. They handled our 401k. We had few choices and the fees were also high. That was back when I was young and stupid instead of just old and stupid.
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Re: Deciding whether to invest in Merrill Lynch 401k
Old 12-30-2006, 04:51 PM   #3
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Re: Deciding whether to invest in Merrill Lynch 401k

You don't have any other choices? Check if there are sales charges on these funds. Maybe not, in a 401K, but my husband and I are trying to get out of Global Allocation and it has a 6 YEAR back end fee. I think Fundamental Graowth does also.
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Re: Deciding whether to invest in Merrill Lynch 401k
Old 12-30-2006, 05:07 PM   #4
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Re: Deciding whether to invest in Merrill Lynch 401k

No company match. I am in the process to convince management to switch to Vanguard. In a holding pattern until group president talks with corporate about the situation.It is a Canadian company that has about 80-100 US employees . So unfortunately we are treated more like a small company.
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Re: Deciding whether to invest in Merrill Lynch 401k
Old 12-30-2006, 05:12 PM   #5
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Re: Deciding whether to invest in Merrill Lynch 401k

bks,

Don't join the 401k. Make sure a few people know that you think the choices are so bad that that's the reason you aren't in the plan. Fund your Roth to the max and put the rest of your pseudo-401k contribution into a nice tax efficient Vanguard index fund.

Look for another job.

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Re: Deciding whether to invest in Merrill Lynch 401k
Old 12-30-2006, 05:54 PM   #6
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Re: Deciding whether to invest in Merrill Lynch 401k

Merrill Lynch sucks.

My Megacorp has our 401K with them. We have acess to some ML funds, some Fidelity, and some Janus funds. I'll check if the ML funds are the same funds and classes you list - and see the fees.

I would first max out your IRA.

If you have additional ability to save, and you are 10+ years from drawing on money, the tax advantages of the 401K might still be your best idea - even though the fees are higher than you'd get a taxable Vangard account. This might be especially true for dividend/income funds.

Good luck campaigning with HR to go over to Vanguard !
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Re: Deciding whether to invest in Merrill Lynch 401k
Old 12-31-2006, 06:53 AM   #7
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Re: Deciding whether to invest in Merrill Lynch 401k

Quote:
Originally Posted by 2B
bks,

Don't join the 401k.

Look for another job.

2B
I wouldn't make such a blanket statement. The tax advantages may very well overcome the high expenses.

In addition, the 401(k) is a good place to keep your income generating investments anyway. Check out the retirement reserves fund, .5 isn't as bad as it could be.

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