401k Investing for Newbies and Nerds

george l. morgan
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There are 90 million American workers who have collectively own $14 trillion in their 401k accounts. They face both challenges and opportunities. The largest opportunity is that their accounts are investment accounts, not savings accounts, and for the past three decades, many have grown their balances in the low double-digit range.  The main challenge 401k owners face is that there are required to make their investment decisions by choosing from a limited menu of mutual funds.   The 90 million 401k account owners can be divided into 3 categories. The first are those who could care less about their money and are willing to just take what they are given. The second group, NEWBIES, are inexperienced in the investment process, but are willing to become engaged in the management of their hard-earned dollars. The third group, NERDS, are those who have a modicum of investment expertise and are willing to devote the time and energy to expand their investments skills.  My mission is to motivate 401k participants to become engaged in their account and then train them how to optimize their results.  I have a 62-years of stock market experience. I have been a stockbroker, finance professor and individual investor. I have no investment products to sell.  All I have to offer are the objective observations of one who has been there and done that.                           

  1. Season 2 Episode 9 A Crummy Gold Watch and An Itty-Bitty Pension Check

    6D AGO

    Season 2 Episode 9 A Crummy Gold Watch and An Itty-Bitty Pension Check

    Send us Fan Mail To my parents' generation, financial security meant working for the same company your whole life. Then when you turned 65, they gave you a gold watch, and once a month you trundled out to the mailbox to get your lousy pension check. The size of the check never changed, and you hoped like hell that the company you devoted your life to didn't go broke. And if you were the breadwinner of the family and you died, good luck to your heirs.  In 1978, all that began to change. That was the year that the 401k program came into being and it was both revolutionary and evolutionary. It took the responsibility for providing for one’s retirement finances out of the hands of the employer and put it in the hands of the employee. For some, this was fantastic news, and for others it was a non-event.  A recent study by the University of Texas documents how dramatically different the program impacts individual account owners. The Texas study took data from 401k participants between the ages of 50 and 60 and found some revealing results; The average account balance for this group was $843,742, but the median figure was only $158,272.  Next the researchers analyzed the investment choices of the 50 to 60 age group. The discovered that 78% of the accounts with larger than average balances were concentrated in stock mutual funds, predominantly index mutual funds. Those accounts with balances below the median had a higher portion of their assets in target date funds. Target date funds hold a mix of stocks and bonds and as the owner ages, the stock portion declines and the bond portion increases. There are two factors that contribute to the growth of a 401k account. The first is the employees payroll contribution. Next are the investment decisions made by the account owner. And here the employer has not been totally removed from the picture. They have the responsibility for determining the mutual funds listed in the plan’s investment menu. While it is impossible to determine the exact impact the investment choices have on asset growth, both parties, employers and employees, must do their homework in order to optimize the outcome.   Support the show

    33 min
  2. Season 2 Episode 8 A Billion Here, A Billion There

    MAY 7

    Season 2 Episode 8 A Billion Here, A Billion There

    Send us Fan Mail During a 1963 debate on the federal budget, the Senior Senator from Illinois, Everett Dirksen proclaimed, “a billion here, a billion there, and pretty soon it starts to add up to real money.” Dirksen didn't use exact numbers, and that was not his intent. He used hyperbole to point out that the proposed level of federal spending would have significant impact on the lives of the American public. The same thing can be said about the current state of our nation’s 401k program: “It is starting to add up to real money.” As it was in Dirkson’s case, the numbers I am about to present are not precise, but because of the massive dollar amount involved, lack of specificity does not diminish the significant role our 401k plan plays in the lives those living out their golden years. The 401k program became the law of the land in 1978. It allows workers to place a portion of their paycheck into a tax sheltered account that will become their primary income source once they retire.  The growth of an individual 401k account has two distinct components. First, there is the additional dollars being added from the participants payroll deductions. Next is the growth of the investments selected by the account’s owner. The program requires the account owner to decide how the assets of the account are invested, but their choices are limited to a small number of mutual funds provided by their plan administrator.   When we entered the twenty-fist century the total value of the 401k program was $1.7 trillion. During the years from 2000 to 2026, the S&P 500 index grew 4 and a half times. Sevent-six percent of all 401k accounts contain equity mutual funds and as we entered 2026 the total value of the 401k assets exceeded $14 trillion.  It is impossible to calculate what percent of this impressive growth in 401k assets can be attributed to payroll deductions and how much to invest gain. But let’s assume that the gain from the investment portion is a meager 25 percent of the total. That translates to $3.5 trillion added to workers retirement accounts due to prudent investing.  Support the show

    33 min
  3. Season 2 Episode 7 Gen X 10, Wall Street Techies Zip

    APR 23

    Season 2 Episode 7 Gen X 10, Wall Street Techies Zip

    Send us Fan Mail When I was a kid, our family car had air conditioning, It was a little triangular shaped window that you flipped around and it blew air on your face. Our family car also had power windows. There was a crank on the door and you were the power. Fact checking involved going to the library and digging through 28 volumes of the Encyclopedia Britanica. But that was then and this is now. My grandkids can’t get out of bed without checking their cell phone. Technology is everywhere and more is on the way in the form of the newfangled AI contraption. Not to be left in the dust, the marketing mental giants of Wall Street have decided to jump on the AI bandwagon. A recent article in the Wall Street Journal outlined how the legacy Wall Street banks are using AI to create NEW investment strategies for the wealthiest clients? Oh, and by the way, it is Wall Street's favorite new way of making money. The WSJ article quoted the managing director of one of the new hi-tech as saying, “Portfolio managers and financial analysts cost money and get bonuses. Computers don’t.”  Before you run out and bet the farm on the latest and greatest new AI technology, let me point out to you that we've been down this road before, and we learned a long time ago that this dog don't hunt. One issue the WSJ article didn’t address was how well these snake oil computer programs perform. To quote Groucho Marx, they're like an ugly stripper: They want to reveal as little as possible.” Because these new funds are nothing more than renamed hedge funds with bigger computers, we can sneak behind the curtain for a glance at how they may perform. Last year, 20% of all of the nation's hedge funds declared bankruptcy and went out of business.  To prove to you that the more things change, the more things stay the same, let me tell you the story of the 25 million Gen Xers who, on average, have amassed $583,800 in their 401k by doing simply, non-technical things. They bought low cost index funds, ignored the Wall Street mavins jibber jabber and just hung on to them for more than a decade. Index funds are the 401k investment equivalent to the triangular air conditioning window on my family’s 1949 Ford.      Support the show

    35 min
  4. Season 2 Episode 6 An Interview with a level 10 401k Nerd

    APR 16

    Season 2 Episode 6 An Interview with a level 10 401k Nerd

    Send us Fan Mail In this episode I spent time with Jake Olsen talking about his 401k experiences.  Jake is a millennial and a Level 10 401k Nerd. I have known Jake for over 15 years. When we first met, Jake was a college student majoring in accounting & finance. Following graduation, he took a job in the finance department of a local Fortune 500 company. During his time there, Jake studied for and completed the Chartered Financial Analyst program. 8 years ago, Jake left the Fortune 500 world and became a co-director at a consulting firm whose mission is to help CEOs at small to mid-sized companies grow their businesses by tying together the key components of financial planning, budgeting, performance analytics, strategy management, and deal management. Jake has 15 years’ experience in managing his own 401k. One with a large corporation and one where he was able to provide input. I found the time I spent with him constructive and informative. One issue in particular I found insightful was his perspective of the value of academic training when applied to the real world. I am sure you will find his responses to my questions enlightening, and hopefully they will open some new doors in your world.     Support the show

    30 min
  5. Season 2 Episode 5 New Menu Items Coming to a 401k Near You

    APR 2

    Season 2 Episode 5 New Menu Items Coming to a 401k Near You

    Send us Fan Mail In August of 2025, President Trump sign an executive order directing the Department of Labor to investigate how to include private equity and cryptocurrency on the investment menu of the nation’s 75,432 401k plans. There are a number of significant obstacles to this directive. The first biggie is how to do 401k plan participants get access to these non-exchange traded alternative investments?  The second significant obstacle to Trump’s plan is the Supreme Court’s Tibble vs Edison decision which ruled that employers must provide their 401k employees with reasonable priced mutual funds or compensate them for their losses. What followed was a decade of lawsuits the lined the coffer of the plaintiffs’ lawyers and resulted in a push to include low-cost index funds in every 401k menu.  This week, Trump’s quest to included alternate investments in all the nations 401k plans reached lift off status when the WSJ carried an op ed piece written by the Secretary of Labor. She declared that her department was moving ahead with regulations that would allow the inclusion of alternative investments in 401k mutual fund menus and they were carving out regulations that would protect employers from lawsuits involving excessive fees restrictions set forth in the Tibble vs Edison decision.  In this episode of my podcast, I will provide further details on this issue, beginning with a brief history of how we got to this point. I will also examine how the financial service industry could manufacture products that allow 401k investors access to “alternative investments.”  I will conclude with my thoughts on how newbies and nerds should react to this developing situation.    Support the show

    35 min
  6. Season 2 Episode 4 401k Investing for Newbies and Nerds

    MAR 19

    Season 2 Episode 4 401k Investing for Newbies and Nerds

    Send us Fan Mail I have been meandering through the wonderful world of investing for over six decades. My main takeaway from these many years of market experience is that change is constant, and if you don’t embrace every new permutation along the way, you will wither on the vine.     When I started my investing journey, things were formal, orderly and predictable. Trades were made by men in blue coats, standing on the floor of a cavernous building in lower Manhattan. Brokers wore dark suits, white shirts and fancy ties. They viewed themselves as investing demigods with powers that placed them on a pedestal high above mere mortals. Because of their unmatched financial powers, they expected big bucks whenever they stooped down to talk with the hoy palloi. Today, tens of billions of trades are made by incredibly fast computers scattered randomly across the country. Members of the financial services industry are not viewed with the same reverence they were back in the day, and they dress more casually than the local TV weatherman. The most dramatic change between then and now is the tens of trillions of dollars the American public has amassed in their 401k plans. Following on the heels of this development is the shift of the responsibility for the management of these assts from the Wall Street professionals to the lowly, unwashed commoners living on Main Street.  The mission of my investment education enterprise is to train the 90 million 401k owners how to optimize their investing experience. I use the word optimized, not maximize, because investing is not a one size fits all proposition. Some are happy with allowing Wall Street to handle their stuff and pay big bucks for subpar returns. Others are engaged in the investment process and expect an enhanced gain in return. My initial effort in this endeavor was titled “Wall Street for Dummies”, but I have come to the realization that titles and key words are critical in attracting viewers. Therefore, I am in the process of changing the name of my podcast and website to more accurately reflect my message.  In this episode I will outline my 401k investing 2.0 program. This is not a left turn or a 180 turn around. It is more akin to moving from a shot gun to a rifle. At some point in the near term, you will need to look for me under the title “401k Investing for Newbies and Nerds.”     Support the show

    33 min
  7. Season 2 Episode 3 The Rockets' Red Glare and Your 401k

    MAR 10

    Season 2 Episode 3 The Rockets' Red Glare and Your 401k

    Send us Fan Mail A week ago, the skies over the Middle East were filled with more rockets than Times Square on New Year’s Eve. The following Monday morning, the Wall Street Journal opined that there would be a massive response on Wall Street to the Middle East missile fusillade. The inference from these reports was that Wall Street’s response would come from a bunch of rocket scientist wanabes, sitting in a windowless room, computers humming softly in the background, calculating the financial impact of the rockets flying in the Middle East. (Note the incredibly clever way I have tied rockets in the Middle East to rocket scientists on Wall Street).  In the midst of all of this massive sell off jibber jabber, inquiring minds have to ask, “Who’s selling what and why?”  A short answer is not rocket scientists. If it were rocket scientists they would calculate the potential reduction of oil flowing from the Middle East, divide that number  by its impact on the following quarters GDP, adjust it for change in both the CPI and wholesale price index, then factor in the impact that the increase in the increase of the price of oil would have on the cost of delivering goods, adjusted by the Fed’s projected response in their commercial lending rates to make the cost of capital appropriate for this current position in the business cycle. In this incredibly insightful episode of my podcast I will explore what really transpired and address how the 90 million American workers with a 401k can use this as a learning experience and at the same time make a couple of bucks that they can send in their golden years to spoiling their grand kids.   Support the show

    33 min
  8. Season 2 Episode 2 All That Glitters Is not Gold

    FEB 11

    Season 2 Episode 2 All That Glitters Is not Gold

    Send us Fan Mail During my second junior year in college, I took a Shakespeare class. I was a business major and wore a coat and tie to class. In a roomful of liberal arts majors, it was obvious that I was the class nerd. The only line I can remember from the lectures was, “All that glitters is not gold.” Full disclosure: I had to Google “Shakespeare” to make sure I had the proper quote. It comes from the Merchant of Venice and is a warning against being misled by outward appearances.  But getting back to Shakespeare’s all that glitters is not gold thing. There are 8,314 mutual funds available to the investment public. In calendar 2025, just 11% of these 8,314 mutual funds beat the market. Their average gain was 13.5%, barely half the 25.7% total return of the market.  Which begs the question? What is the market? The gold standard for the market is the S&P 500 and the benchmark most quote by the financial media. It consists of 500 publicly traded companies selected by a committee hired by the index’s owner, Stand and Poors. It is the most comprehensive of the major indexes and includes 92 percent of all publicly traded companies.   Of the 8,314 mutual funds produced by Wall Street, 73 percent are actively managed funds, which means that they have a professional manager who trades the stocks in the fund’s portfolio in order to increase its performance. The remaining 27 percent are passive index funds whose object is to mimic the performance of a specific market index. Index funds don’t trade in order to enhance their performance thus eliminate all trading cost and the expense of a fund manager. In 2025, only 914 of all the mutual funds equaled or beat the market. Of that 914, 177 were index funds who mimic the S&P 500. Of the remaining 737 funds, only 112 made the high-performance list in 2024. All 77 S&P 500 funds were on the winners list in 2024, and the year before and the year before, and so on.  A 401k account is an investment account not a savings account. But investing is not a one size fits all proposition. Those who manage their 401k who manage their 401k wisely will get the gold. Those who take a casual approach to the management of their 401k will end up with shiny pyrite, also known as fools’ gold.        Support the show

    34 min
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About

There are 90 million American workers who have collectively own $14 trillion in their 401k accounts. They face both challenges and opportunities. The largest opportunity is that their accounts are investment accounts, not savings accounts, and for the past three decades, many have grown their balances in the low double-digit range.  The main challenge 401k owners face is that there are required to make their investment decisions by choosing from a limited menu of mutual funds.   The 90 million 401k account owners can be divided into 3 categories. The first are those who could care less about their money and are willing to just take what they are given. The second group, NEWBIES, are inexperienced in the investment process, but are willing to become engaged in the management of their hard-earned dollars. The third group, NERDS, are those who have a modicum of investment expertise and are willing to devote the time and energy to expand their investments skills.  My mission is to motivate 401k participants to become engaged in their account and then train them how to optimize their results.  I have a 62-years of stock market experience. I have been a stockbroker, finance professor and individual investor. I have no investment products to sell.  All I have to offer are the objective observations of one who has been there and done that.                           

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