Is your 401(k) looking like a 201(k)? Maybe you need investment advice

For the first time in twenty years, 401 (k) account balances have gone down due largely to losses in the stock market.

A new survey of 401 (k) account balances by Cerulli Associates shows that 401 (k) assets shrank by 72 billion dollars in 2000. The average 401(k) account balance declined to

A major reason for the decline in 401 (k) account balances in the past year is that plan participants have invested heavily in equities. A study released in February of this year by the Employee Benefit Research Institute of 10.3 million participant 401 (k) accounts in over 32,000 plans showed that in 1999, 53 percent of account balances were in equity finds, 19 percent in company stock, 11 percent in GIC and stable value funds, 7 percent in balanced finds, 5 percent in bond funds, and 4 percent in money funds. Adding the equity fund, company stock, and equity portion of the balanced funds together, participants in 1999 invested about 75% of their portfolios in equities.

Online Tools Help Now

Even without investment advice, good tools exist on Internet sites to help investors choose how to invest their 401 (k) dollars and how much to contribute each year to meet individual goals. Now is a good time to re-evaluate the amount of risk investors have in 401 (k) accounts and how much they need to contribute to reach their goals.

Schwab, the provider for the Engineers and Scientists Retirement and Investment Program has excellent investment and retirement planning tools on its Web site. AIChE members may visit www schwab.com and dick on the "getting started." Start with the investor profile and then move on to the retirement planner. Members can also visit www.aiche.org or call 1-800-790-7704 for details.

Investor Profile

The Schwab investor profile program tries to identify how much risk investors can assume in their portfolios. After filling out a short profile, the program suggests an allocation of investments between stocks, bonds, and money market or stable value investments.

Retirement Planner.

In addition to knowing how to allocate investments, AIChE members who participate in 401 (k) plans should know how much they need to invest each year. Schwab's retirement planner helps participants establish retirement goals and a retirement budget, and determine annual contributions necessary to meet goals. With 401 (k) losses in the past year, re-evaluating annual contribution rates could make a difference in meeting financial goals.