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Options trading I was a financial adviser, but a free online tool highlighted exactly what we’d overlooked in my husband’s 401(k)


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Options trading I was a financial adviser, but a free online tool highlighted exactly what we’d overlooked in my husband’s 401(k)

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective.I worked as a financial adviser for years, but even then I had a hard time understanding the fees…

Options trading I was a financial adviser, but a free online tool highlighted exactly what we’d overlooked in my husband’s 401(k)

Options trading

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective.

  • I worked as a financial adviser for years, but even then I had a hard time understanding the fees I was paying on my 401(k).
  • When I heard about Blooom, an online tool that analyzes your 401(k) for free, I decided to run my husband’s retirement account through it.
  • The fees on his account were extremely low (because we did a lot of research before deciding how to invest) but I learned that he could diversify his portfolio for a potentially higher rate of return.
  • Use Blooom to analyze your 401(k) today and see how you can grow your retirement savings »

Retirement accounts — especially the fees — are not always the easiest to understand. Even when I worked as a financial adviser I didn’t know quite how much I was paying in fees on my 401(k)

That’s why I was thrilled to try Blooom, a service that analyzes 401(k)s to help individuals better understand their investments and what fees they are paying within their employee-sponsored retirement plans.

Although I had already taken a look at my husband’s retirement plan options and felt we made the best choices that were available to him, I signed up for a free analysis of his 401(k) from Blooom to see how the service worked. 

My first impression of Blooom was a positive one. I was able to quickly setup an account and link to my husband’s 401(k) through Fidelity.

Blooom asks you a few questions to assess your risk tolerance and then it goes right into the analysis of your account. One of the questions it asks is at what age you would like to retire; I selected age 55. I am a big fan of the FIRE (Financial Independence Retire Early) movement, and our plan is to ideally retire long before the government’s “retirement age”. 

After fully connecting to your account, Blooom analyzes your 401(k) based on three factors: diversification; risk assessment; and fees. 

Options trading Assessing our 401(k) fees

For investment fees, my husband’s account is at .01%. Blooom told me, “You’ve done a great job minimizing the investment fees in your account,” and I’m proud of this fact as I carefully studied the investment choices my husband had in his 401(k) and tried to minimize the fees as much as possible. 

options trading Blooom investment fees


Blooom


Although a small fee doesn’t seem like a lot right now, it adds up over time and can reduce the value of your portfolio by tens of thousands of dollars.

Find out how much you’re paying in 401(k) fees with a free assessment from Blooom »

Options trading Risk assessment

The next area was risk assessment. My husband’s 401(k) is invested 100% in stocks, which Blooom compared to an optimal balance of 98% stocks and 2% bonds. 

At this point in our investing career, I really don’t see the point of being invested in bonds. We have lots of investing years to ride out the ups and downs of the market, so we will continue to invest in 100% stocks for the time being. 

options trading Blooom risk


Blooom


Options trading Assessing our asset diversification

The last thing Blooom analyzed was our diversification of assets. Currently, my husband’s 401(k) is invested 100% in Large Cap stocks. Blooom recommended a mix of 38% Large Cap, 36% International Stocks, 14% Mid Cap stocks, 10% Small Cap stocks, and 2% Intermediate Term. 

I was aware that his account was heavily invested in Large Cap stocks, but didn’t realize that it was 100% invested in that category. This was the one area of analysis that I felt was very valuable and is something I will look into in the near future. 

options trading Blooom diversification assessment


Blooom


Options trading Playing around with Blooom

The other Blooom feature that I felt was valuable was the page where you can see what your projected account balance would be at your chosen retirement age. 

You are able to change factors — such as risk tolerance, retirement age, life expectancy, and annual contribution — and then refresh to see how this change affects the projection. 

I played around with it for awhile, and the screenshot I took below shows what the account balance would be if my husband retired at age 60 and only contributed $3,600/year to the account.

options trading blooom

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Blooom


After the analysis, Blooom describes how it works: If you sign up for an account at an annual cost of $120, Blooom will research the funds available to you in your own account, make adjustments based on your risk tolerance, and keep your account diversified while reducing fees.

Although I felt that the analysis was really educational and loved how user friendly the service was, I decided not to sign up for Blooom at this time. 

As someone who generally understands how 401(k)s work and the investment options that are available within them, I feel the service is better suited for someone who wants to make sure they are optimizing their 401(k) to the best of their ability but are generally confused by their options and unsure how to decrease the fees in their account.

Want to find out how much you’re paying in 401(k) fees? Get a free assessment from Blooom today »

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