401k advice

I've had a 401k with present company for the last 12 years.
I put 12 percent - without a company match.
I have approximately $40K in it. The last two years, according to my statements, the account's portfolio has created about $200 annually.
I have the account slated in a growth mode - a good bit of stocks - but it is a very moderate growth mode.
Should I change the 401k and be more aggressive? Should I pull out my 401k money and put it with another investor (which is my inclination)?
I really don't fell like my retirement fund is working as well as it should.

 

Do you have that option? If so, yes. 401k's have gotten so restrictive in their choices lately. A standard IRA will let you invest in just about anything (except gold, so Ragu's out). Since we left our company and were able to convert 401k to IRA, our investments have grown by leaps and bounds compared with what they were doing.

 

Honestly, from everything I've read, your best bet for a solid return is to just forget about all the mumbo-jump regarding aggressive, conservative, etc., etc., and just put a lot of your funds into index funds. Year after year, they outperform most mutual funds.

That said: I'm extremely impressed at the 12 percent contribution. Nice discipline. I hope I can get up to that sort of withdrawal eventually.

 

Honestly, I'm not sure.
I guess I am assuming. I signed up, but I am not aware of any contractual obligations. I am assuming I can transfer the money to another retirement account with another broker of financial adviser.

 

Still in journalism, so my wife is the primary breadwinner. Any raises I get I plug into my retirement.

 

Edit: Update:

I'm told I can stop contributing, but the money I currently have invested can NOT be withdrawn or transferred unless I terminate employment. As if I needed another reason to leave.
I will look at trying to convert the funds to IRAs.

 

Yeah that's what I thought -- I seemed to recall that it was frozen where it was pending job change. (Side note here: Do NOT borrow against your 401k under these circumstances, or under any circumstances unless you are sure you will be with the company for the life of the loan. If you leave the company for any reason, even if you're laid off, you have to pay the entire principal back within 90 days. And if you can't pay it back, they use your existing 401k funds and call it a "withdrawal" with the taxes and 10 percent early withdrawal penalty. Not something that ever happened to me, thankfully, but something that a lot of people don't know about.)

The index fund Dick mentioned is probably the best bet within the 401k structure.

 

We borrowed from my wife's plan to make a down payment on our house recently. She plans on staying at her job for the foreseeable future. If not, I suppose we'd have to make sure we had enough credit card space available to pay it back that way in a pinch.

 

Are you maxing out a Roth IRA? If you're not getting a company match, I'd make sure the Roth IRA is maxed out, then contribute any additional money to the 401(k).

 

The Roth IRA doesn't offer any immediate tax advantages, though. So you'd be paying the full $5K out of pocket. Huge tax advantages down the road, but it will cost quite a bit extra now. I think most financial folks would say that is not the advisable play.

 

Are you sure you have your numbers right? Because that's a 1/2% annual return (200/40000). That might not be so unreasonable if your money were totally in cash, but you say it's in some sort of growth investment. CNBC recently published a "dirty dozen" of the 12 worst mutual funds, and those had 5-year annualized returns of something around 2%.

So before you do anything, I think you should get your numbers squared away. Then, because I suspect you don't have much in the way of which company manages your 401K, find out just what is offered. Only then can you decide what to do.

 

That return seems impossibly low.

75 percent of my 401(k) has been in a money market for the past 2 years --- the other 25 percent in a S&P Index fund --- and the portfolio has still earned 11.4 percent since September 2011.