Self-Directed 401k Balances Rose This Much in 2021

Charles Schwab SDBA Indicators Report

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The average self-directed 401k account balance at the end of 2021 rose 6.4% year-over-year to $352,764 according to Charles Schwab’s SDBA Indicators Report, an industry-leading benchmark on retirement plan participant investment activity within self-directed brokerage accounts (SDBAs).

That’s a 3.4% increase from Q3 2021, despite November beginning with fears over new COVID variants, inflation, and Fed asset tapering. The fourth quarter 2021 SDBA Indicators Report reflects continued resilience among investors through a historically volatile year. Balances ultimately ended the quarter higher as investor concerns subsided and the economy proved stable overall.

SDBAs are brokerage accounts within retirement plans, including 401ks and other types of retirement plans, that participants can use to invest retirement savings in individual stocks and bonds, as well as exchange-traded funds, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.

Participant holdings remained similar to the fourth quarter of 2020, with a slight decrease in cash holdings and slight increases in equities and ETFs. The majority of participant assets were held in equities (37% in 2021 vs 35% in 2020). Mutual funds were the second largest holding at 30% (vs 31% in 2020), followed by ETFs (21% vs 18% in 2020), cash (11% vs 14% in 2020), and fixed income (1% vs 2% in 2020).

The data also reveals specific asset class and sector holdings within each investment category:

More highlights

The SDBA Indicators Report includes data collected from approximately 178,000 retirement plan participants who currently have balances between $5,000 and $10 million in their Schwab Personal Choice Retirement Account. Data is extracted quarterly on all accounts that are open as of quarter-end and meet the balance criteria. Data contained in the quarterly report can be found here, along with prior reports.

SEE ALSO:

• Why 401k Plan Sponsors Increasingly Eye Self-Directed Brokerage Accounts

• 3Q 2021: Self-Directed 401k Investors Stay Steady, See Balances Increase

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