Anything 401(k) related—lawsuits, rollovers, demographics, auto this and that—is sure to get attention, and CNBC deemed it necessary to repost Jim Cramer’s thoughts on the topic.
In the spirit of addressing outlandish and often ill-informed takes on the 401(k), we therefore thought it necessary to repost our response.
While Cramer conceded a 401(k) is important, he bemoaned its “downsides,” adding there are plenty of them. Cramer specifically pointed to high fees, a lack of control over the investment assets and a lack of choice over where to invest.
The “Mad Money” host’s ideal would be to have workers “buy a diversified portfolio of individual stocks and do the homework on each one of them—ideally one hour per week per stock.” [Emphasis hours]
It’s almost as if the gregarious television personality had never heard of the country’s dismal savings rate, lack of financial literacy and, you know, jobs. It might come as a surprise to know that not all (or even a majority) have hours on end each week to research a “diversified portfolio of individual stocks.”
If they did, there’d be no need for financial advisors. (And just how many stocks does he think should constitute a diversified portfolio; 10, 20, 40?)
Cramer’s recommendation is to contribute as much money to a 401(k) needed to get the full company match, and then stop. At that point, the rest of the retirement savings should go to an IRA. Thankfully, not bad advice; but again, time permitting.
Jim Cramer has, of course, failed to keep pace with the S&P 500 in his picks, and he once referred to Lenny Dykstra as “one of the great money managers.”
That’s the ex-baseball player nicknamed “Nails” who went to prison for bankruptcy fraud, having also been accused of grand theft auto and money laundering before accepting a plea agreement.
As if responsible 401(k) advisors haven’t enough on their plates, they’ve got to deal with nonsense like this. We just thought you should have an idea of the so-called information you might have to dispel in your next client meeting. Happy Monday.