English Deutsch Français Italiano Español Português 繁體中文 Bahasa Indonesia Tiếng Việt ภาษาไทย
All categories

tricky question of the day, lol, I was looking at my statement for my 401k and it shows for the last fiscal quester I made 5.4% interest. I've made around that for each quarter since I opened it a a while ago. Initially, I was thinking "hey, thats 20% for the year, not bad", but I don't think thats correct. I'm not sure, but if you make 5% each quarter for a year that means you made 5% for the year correct?

This is a good question for an accountant, hopefully I'm not making only 5.4% a year on my 401k, as aggressively and diversified as I have it set-up, lol

2007-08-29 12:08:04 · 6 answers · asked by Will H 2 in Business & Finance Investing

I looked at my statement again, its states 5.4% RETURN for the quarter on the investments, they're mutual funds/stocks

2007-08-29 14:31:39 · update #1

6 answers

Lets brake this down say you had $1000 at 5% first qtr your would have $1050. second qtr 1105.50, third 1167.53, forth 1215.51 and fifth 1276.28.. Since you also get interest on the interest added to your account, you net gain is actually close to 22%

2007-08-29 12:31:28 · answer #1 · answered by Pengy 7 · 1 1

What kind of investments are in your 401k? If they are fixed-income investments, then you are making interest, and the 5.4% is probably the annual rate, not what you made in one quarter. If you are invested in stocks, then this 5.4% might actually be your total return on investment -- mostly capital appreciation -- and it's possible that that is for one quarter (although that would be a huge return, and not likely). At any rate, a 5.4% total return on investment for a single quarter would work out to 23.4% for a whole year, if you could maintain it each quarter. This is because of the effect of compounding.

2007-08-29 21:16:20 · answer #2 · answered by Califrich 6 · 0 0

If you are invested primarily in equity (stock) funds then what you are probably seeing is a Return on Investment rather than Interest. If you have been investing in some aggressive equity funds than that return is entirely possible.

To give you an idea the benchmark S&P 500 index has returned on average since 1976 about 12% yearly....with many higher and lower (even negative) returns in between.

So if you are investing aggressively in your 401k for the long run don't be suprised to see large fluctuations in your quarterly returns. The past few quarters have been very good. We'll see about this one..so far not so good.

2007-08-29 20:01:00 · answer #3 · answered by kevinjohnbrown 2 · 0 0

If you earned 5.4% each quarter, you'd be making closer to 25% on the year. Second quarter of 2007 (March-May) was very good, but the market correction has already taken care of that. Don't start spending that 25% in your head already. Investing is a long-term project.

2007-08-29 21:41:35 · answer #4 · answered by Anonymous · 0 0

Actually it is a little more than 5% because you are getting 5% on the interest also in subsequent quarters. You had better define aggresive because 5.4% is just a little better than a money market fund or a very short term bond fund.

2007-08-29 19:21:33 · answer #5 · answered by BD in NM 6 · 0 0

First, you're not making 5% for the quarter. You're likely making 5.4% APR, just like the statement says.

2007-08-29 19:24:39 · answer #6 · answered by Sgt Pepper 5 · 0 0

fedest.com, questions and answers