Hi Grace,
I don't know which bond fund(s) you have in your 401(k)s, but the folks I know are pretty much limited to a Fidelity fund or maybe a Vanguard fund. The figures I can remember were for Fidelity Ginny Mae Fund which Y-T-D was yielding < 1% (as of about late April) and Fidelity Government Bonds which was also yielding < 1% Y-T-D, in the same time frame. These people can't just shop around for a better yield on bond funds. They're locked into whatever their employer offers under the auspices of a qualified 401(k) plan. Maybe Pimco pays higher, I don't know, but these people can't get Pimco in their plan. Of course, the same argument is also true for the equities funds. They're locked into whatever the plan offers. If they're in a Fidelity plan, then they can't get say a Vanguard fund, or vice-versa. Short of changing employers, there's not too much an individual can do. (Yes, I know they can withdraw from the 401(k) plan and then exercise a roll-over into something else, but if they do that, then they forfeit the employer's matching funds.)
Now, had these people been in bonds way back in the year 2000, they might have realized some hefty gains in their bond funds. But they weren't. They were 100% in equities. So to jump into bonds now is just a tad too late to enjoy any gains realized in 2001 or even 2002, but they could probably get in now, before any big reversals in bonds, just in time to be fleeced once again. <g>
KJC |
