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USA Today
a day ago
- Business
- USA Today
Not easy to become a 401(k) millionaire as balances dip in first quarter, Fidelity says
Not easy to become a 401(k) millionaire as balances dip in first quarter, Fidelity says Show Caption Hide Caption Understanding a 401k: How it works and why it's important What is a 401k plan? Key benefits and how to maximize your savings. Fidelity reported that 512,000 savers were 401(k)-created millionaires in the first quarter, down about 4.6% from 537,000 in the fourth quarter of 2025. Most individuals continued to contribute to their retirement savings and continued to invest in stocks. Only 0.9% of 401(k) participants stopped contributing at all to a 401(k) plan in the first quarter, according to Fidelity. Retirement savers have faced plenty of white knuckle days in 2025 where stock market conditions — and on-again, pause-again tariffs — put everyone's nerves on edge. Amazingly, no matter how awful things felt some days, many have not seen a double-digit fallout in their 401(k) savings in the first quarter, according to the latest data from Fidelity Investments. Average 401(k) retirement account balances fell 3% from late last year through the first three months this year to $127,100. Savers still saw a 1% gain in balances from the first quarter a year ago, according to Fidelity Investment data. Not as many 401(k) millionaires It wasn't as easy to become a millionaire during the first quarter's rough ride. Fidelity reported that 512,000 savers were 401(k)-created millionaires in the first quarter, down about 4.6% from 537,000 in the fourth quarter of 2024. These savers had at least $1 million in their retirement account. Fidelity saw a record number of 401k-created millionaires in the third quarter last year at 544,000 savers. Fidelity Investment's 401(k) data is based on 25,300 defined contribution plans at various companies across the country. The plans covered 24.4 million participants as of March 31. The on-again, off-again market panic What a difference a few months of economic uncertainty makes. We had a good, set-it-and-forget-it kind of a year in 2024. At the end of last year, retirement savers saw average 401(k) balances go up 11% from the start of the year, according to Fidelity's data. Even seeing a 3% decline in the first quarter this year could be unsettling for some savers, considering that 401(k) savers only saw a slight 0.5% dip on average from the third quarter through the fourth quarter last year. You would have to go back about two years to the third quarter of 2023 to see a drop of 4% in average retirement savings from the second quarter that year. So far, it has been one incredibly weird kind of a year with some miserable declines and some miraculous rebounds. Fortunately, many investors are no longer dealing with the 15% year-to-date decline that we saw as of April 8 for the Standard & Poor's 500 index. "If one 'took a nap' on Jan. 19 and didn't wake up until May 31, they would have conjectured that the markets had been relatively calm," said Robert Bilkie, CEO of Sigma Investment Counselors in Northville. The S&P 500 index was up 0.92% year to date through June 2 when the S&P 500 closed at 5,935.94 points. The total year-to-date return — including dividends — was 1.49% through the market close June 2. The total return was 25.02% in 2023 and up 26.29% in 2025. Most diversified common stock accounts held by savers are up modestly for the year, Bilkie noted. In case you missed it: Stocks have taken a beating. What should you do about your 401(k)? Pain worse for those investing in auto stocks, other companies The key word here is diversified. Some investors continue to face deep losses in 2025, particularly if they invested a large chunk of their money in one stock or industry. General Motors stock, for example, was down 10.47% year to date from its close of $53.27 a share on Dec. 31, 2024, through the June 2 close of $47.69 a share. Stellantis was down 25% from its close of $13.05 a share on Dec. 31 through its close on June 2 of $9.78 a share. Ford stock is up 0.8% from year-end 2024 when the stock price closed at $9.90 a share through June 2 when the stock closed at $9.98 a share. "The worst losses were centered around companies that were impacted by the uncertainty surrounding tariffs and trade war," said Sam Huszczo, a chartered financial analyst in Lathrup Village. "Think Tesla or Nike, who are very dependent on a confident consumer and relying extensively on international markets, manufacturing, and supply chains." Tesla stock was down 15% year-to-date through June 2; Nike was down 18.6% during that same time before dividends. This year, many investors also sold stock in some companies as they took profits from the high-flying stocks of 2024, like technology stocks, Huszczo said. "What goes up fast, also comes down fast. As the market darlings of last year turned into this year's cautionary tales." We continue to witness unpredictability, and a sense that things are different from economic shifts in the past. Wild swings made it hard to know what to do Unlike the 2008-09 meltdown, we've not seen stock prices just keep continuously falling so far this year. Instead, we've seen some ungodly volatility. We've had days where the Dow Jones Industrial Average lost 2,231.07 points or 5.5% on April 4 and suddenly gained 2,963 points or 7.87% on April 9. Huszczo said many individual investors who are saving for retirement or other reasons tended not to panic sell, and often bought into the dip. Some "charged into the dip like it was Black Friday." Lost retirement funds: $1.7 trillion sits in lost and forgotten 401(k) accounts. Is one of them yours? On 'Liberation Day' on April 2, Donald Trump put tariffs on every nation. On April 9, though, Trump paused his "Liberation Day" tariffs for 90 days until July 8 after Wall Street revolted over the widespread tariffs, which were expected to drive up prices and drive down economic growth in the United States. Now, the Trump administration wants countries to provide their best offer on trade negotiations by June 4, according to a Reuters report June 2. Michael Shamrell, Fidelity's vice president of thought leadership for workplace investing, said Fidelity recommends that maintaining a long-term plan is often the most appropriate strategy when investors face an uptick of volatility in the market, as has been the situation in 2025. "Factors like rapid policy changes, political uncertainty, and the impact of tariffs, along with the speed and magnitude of changes, contribute to a sense of heightened instability," the Fidelity report stated. Savers still want to continue to contribute at least enough in savings to 401(k) plans, Shamrell said, to receive their company's matching contributions. "It will not only put you in a good spot when markets recover but also allow you to continue to take advantage of any matching contributions your employer might offer," Shamrell said. Shamrell told me in a phone interview that it's encouraging that many people continued to stay on course in early 2025 and not make changes with their 401(k) savings — even with all the dramatic swings on Wall Street. The total 401(k) savings rate — adding both employee savings and employer contributions — increased to a record 14.3% in the first quarter, according to Fidelity data. The record-high 401(k) total savings rate, according to Fidelity, was driven by an unprecedented employee contribution rate of 9.5%, plus an employer match of 4.8% — the highest employer contribution rate recorded to date. At a 14.3% total retirement savings rate, Shamrell said, more people are moving closer to a recommended 401(k) savings rate of 15%. Fidelity recommends that employees aim to save at least 15% of their pretax income each year, including matching money from your employer, to help ensure that they have enough money in retirement to maintain their current lifestyle. Shamrell said the first quarter results likely benefited as some companies increased their 401(k) contributions into the plans based on profit-sharing arrangements. Beginning in 2025, the federal law called the Secure 2.0 Act also required companies with new 401(k) plans and 403(b) plans to automatically enroll eligible employees at a minimum contribution rate of 3%, but no more than 10%. The employee may opt out. Also under Secure 2.0, those enrolled in new 401(k) plans would automatically see their contributions out of their paychecks go up by 1% or so every year until they reached 10%. The employee could opt out or change the contribution rate. Both auto enrollment and auto escalation rules that began in 2025 apply to new plans established on or after Dec. 29, 2022. Employers are not required to offer 401(k) plans under Secure 2.0. Other retirement trends, according to Fidelity data: Most individuals continued to contribute to their retirement savings accounts and continued to invest in the stock market. Of the 6% individuals that made a change to their allocation, 28.2% of those participants moved some of their savings into more conservative investments. Only 0.9% of 401(k) participants stopped contributing at all to a 401(k) plan in the first quarter. More than 66% of 401(k) participants used a target date fund or managed account, which offers a mix of assets. Target date funds provide an asset mix that reflects an individual's age and their expected or targeted year of retirement. Managed accounts are more personalized and also consider an individual's goals and risk tolerance. Overall, 401(k) savers and investors have been resilient, according to Melissa Joy, president of Pearl Planning, a wealth adviser in Dexter. Many investors who maintained their overall allocation saw their portfolios start to return to positive territory by early May, she said. "We were seeing accounts just north of positive — up 2% to 4% at the end of the first quarter. Then, liberation day made everything topsy turvy in early April with deep but in many cases temporary drawdowns," she said. She acknowledged, though, that it is becoming difficult for some investors to separate their political outlook from their investment perspective. "But, all-in-all, our clients maintained their allocations and investment strategy through the volatility we've seen so far this year," Joy said. Uncertainty, of course, remains among the most popular words used by CEOs and other business leaders in 2025. We don't know what's next for Wall Street, trade talks, or the overall economy — and that isn't making it easy to save for retirement in 2025. Contact personal finance columnist Susan Tompor: stompor@ Follow her on X @tompor.
Yahoo
16-05-2025
- Business
- Yahoo
Veteran analyst has a new message for gold investors
Jurrien Timmer of Fidelity Investments, on May 16, wrote that Bitcoin has again become the dominant store of value in the market, referring to Bitcoin's recent rise to over $100,000 and the narrowing of the risk-adjusted returns to gold. In his post for X, Timmer suggested that after gold's rise, 'perhaps the baton is being passed again to Bitcoin, with Bitcoin back above $100K and the two Sharpe Ratios now converging'. Sharpe ratio is a mathematical way to show that long-term returns that are higher than expected may be due to risk and volatility rather than good investing skills. Timmer, who has been the Director of Global Macro at Fidelity Investments since 1995, believes that gold and Bitcoin is in 4:1 ratio where for four parts gold one can buy one part Bitcoin. He said, 'I still think a ratio of 4:1 (gold vs Bitcoin) makes sense in terms of how much gold vs Bitcoin might co-exist in a store-of-value allocation. At a 4:1 ratio, gold's volatility has been roughly equal to Bitcoin, as has its relative performance.' Timmer gives a data-based rationale to combine crypto with a traditional portfolio by quantifying risk adjusted performance. With both markets now revealing similar efficiency on a Sharpe basis, the Fidelity Investment strategist feels the future of store-of-value investing will see Bitcoin featured as a main protagonist and equal partner with the precious metals counterpart. On April 22, Timmer predicted an S&P 500 rally after it was in the correction territory during the month. At press time Bitcoin is trading at $104,043.55, up over 0.82% in the last 24 hours, as per Kraken.
Yahoo
22-03-2025
- Business
- Yahoo
4 Fidelity Mutual Funds to Buy Amid Market Uncertainty
The U.S. market remains volatile due to shifting domestic and foreign policies under President Donald Trump's new administration. Investors are still concerned about the impact of new tariff policies on inflation and the domestic economy. However, Chairman Jerome Powell's comment that the Fed is still committed to its initial revised guidance of two rate cuts in 2025 to lower interest rates by a half-percentage point brought some relief. The Consumer Price Index (CPI) increased 0.2% in February after rising 0.5% in January, much cooler than expected. On an annual basis, CPI dropped 2.8% from 3% in January. Retail sales grew solidly despite worries over economic slowdown and rising inflation. Retail sales increased by 0.2% in February, better than the downwardly revised decline of 1.2% in January. As per a report by the University of Michigan, preliminary consumer sentiment for March decreased to 57.9 from 64.7 reported in February. As anticipated, The Federal Open Market Committee has kept the key interest rate unchanged in the range of 4.25-4.5% in its last meeting. Amid such uncertain market conditions, mutual fund investing can help those who wish to diversify their portfolio among various asset classes but lack professional expertise in managing funds. Fidelity mutual funds like Fidelity Select Semiconductors Portfolio FSELX, Fidelity Select Insurance Portfolio FSPCX, Fidelity New Millennium Fund FMILX and Fidelity Large Cap Stock FCLKX should be good choices since they provide low-cost and uncomplicated equity funds that can help investors meet their goals. These funds have wide exposure in industries like finance, industrial cyclical, utilities, technology and energy. These have not only preserved investors' wealth but also generated excellent returns. Fidelity mutual funds would be a compelling choice for investors. This is because Fidelity mutual funds have given positive returns in the past and are expected to perform well in the long run. Headquartered in Boston, MA, Fidelity Investment is one of the oldest and most trusted mutual fund companies in the world. The company was founded in 1946 and had 51.5 million individual investors and $15.1 trillion of assets under administration as of Dec. 31, 2024. Fidelity Investment company has more than 77,000 associates in 11 countries across North America, Europe, Asia and Australia to carry out extensive and in-depth research and provide potential investment avenues worldwide to their clients. The company provides best-in-class financial planning, advisory services, retirement planning wealth management, brokerage services to its clients. Thus, investors who wish to diversify their portfolio among various asset classes but lack professional expertise in managing funds can choose Fidelity mutual funds. Fidelity Investment sells its mutual fund products directly to its clients, which results in a zero-load charge. We have thus selected four Fidelity mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns, and minimum initial investments within $5000. The funds carry an expense ratio of less than 1%. Notably, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money). Fidelity Select Semiconductors Portfolio invests most of its net assets in common stocks of domestic and foreign companies that areprincipally engaged in the design, manufacture, or sale of semiconductors and semiconductor equipment. FSELX chooses to invest in stocks based on fundamental analysis factors such as each issuer's financial condition, industry position, and market and economic conditions. Adam Benjamin has been the lead manager of FSELX since March 15, 2020. Most of the fund's exposure was in companies like NVIDIA (24.9%), Broadcom (6.5%) and ON Semiconductors (6.4%) as of Nov. 30, 2024. FSELX's three-year and five-year annualized returns are nearly 23.1% and 31.7%, respectively. FSELX has an annual expense ratio of 0.63%. To see how this fund performed compared to its category and other 1, 2, and 3 Ranked Mutual Funds, please click here. Fidelity Select Insurance Portfolio fund invests most of its net assets in common stocks of domestic and foreign companies that areengaged in underwriting, reinsuring, selling, distributing, or placing property and casualty, life, or health insurance. FSPCX advisors choose to invest in stocks based on fundamental analysis factors like financial condition and industry position, along with market and economic conditions. Fahim Razzaque has been the lead manager of FSPCX since July 13, 2022. Most of the fund's exposure was in companies like Chubb (10.8%), AON (8.1%) and Arthur J. Gallagher (8.1%) as of Nov. 30, 2024. FSPCX's three-year and five-year annualized returns of 18.4% and 19.1%, respectively. FSPCX has an annual expense ratio of 0.70%. Fidelity New Millennium Fund invests the majority of its net assets in the common stocks of small and medium-sized companies that exhibit either growth or value characteristics or both. FMILX advisors generally invest in companies that may benefit from long-term changes due to technological advances, product innovation, economic plans, demographics, social attitudes, and other factors. Daniel Sherwood has been the lead manager of FMILX since Oct. 19, 2022. Most of the fund's exposure was in companies like NVIDIA (6.9%), Microsoft (5.9%) and Apple (5.6%) as of Nov. 30, 2024. FMILX has three-year and five-year annualized returns of 16.8% and 18.5%, respectively. FMILX has an annual expense ratio of 0.77%. Fidelity Large Cap Stock invests most of its net assets in common stocks of large market capitalization companies with market capitalization similar to the companies listed on the Russell 1000 Index or the S&P 500 Index. FCLKX advisors generally invest in issues of both domestic and foreign companies. Matthew W. Fruhan has been the lead manager of FCLKX since May 25, 2017. Most of the fund's exposure was in companies like Microsoft (6.2%), Wells Fargo (5.8%) and NVIDIA (5.1%) as of Oct. 31, 2024. FCLKX's three-year and five-year annualized returns are 15.3% and 18.7%, respectively. FCLKX has an annual expense ratio of 0.45%. Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (FSPCX): Fund Analysis Report Get Your Free (FSELX): Fund Analysis Report Get Your Free (FMILX): Fund Analysis Report Get Your Free (FCLKX): Fund Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
