Internet Is a Gold Mine of Free Information for Plan Investors

Not only are a growing number of us participating in 401(k) plans, but more and more of us can now also access our retirement accounts online--to make transactions, to look up account balances or simply to learn more about investing and investments.

Yet for some reason, the percentage of 401(k) investors who actually take advantage of the Internet isn’t growing. In 1997, about 43% of plan participants who could access and research their 401(k)s online did so. Today, only about 38% do, according to a just-released survey conducted by the mutual fund and brokerage firm American Century Investments, based in Kansas City.

By contrast, the percentage of mutual fund investors in general who use the Web has tripled since 1996.

“Why is there a differentiation between 401(k) participants who have access to the Internet and those who are using it?” asks David Peckman, vice president of MPower/401(k) Forum, an online 401(k) investment advisory service. “It comes down to one simple factor--education,” he says. “You have to know that something is available to you, you have to know its value, and you have to know how to access it.”

Indeed, a new Harris Interactive poll found that 34% of investors who have Internet access but don’t use it to invest online wanted a class or tutorial on how to use online investing tools. An additional 22% wanted to know how using the Internet would make them a more informed investor. (Of course, some 401[k] investors may have decided they just don’t need to check their accounts online.)

In that vein, here’s a quick look at 10 easy things you can do online--for free--to maximize your 401(k) account (or most other accounts, for that matter):

* Learn how you should allocate your assets. Talk to the experts and they’ll tell you that deciding how to allocate your investments among stocks, bonds and cash--and specific types of stock and bonds--will have more impact on your returns than the individual funds you choose.

Sites run by mutual fund giant Fidelity Investments (https://www.fidelity.com) and discount brokerage Charles Schwab (https://www.schwab.com), among many others, will recommend a basic asset allocation strategy to you. In other words, they’ll tell you how much to put in funds that invest in large U.S. stocks, small U.S. stocks, foreign stocks, bonds and cash. All you have to do is answer a handful of questions.

* Find out how your 401(k) account is now allocated. What good is knowing how you should allocate your assets if you don’t know how your assets are currently allocated?

Many employers will provide participants with this information in quarterly 401(k) statements. But if yours doesn’t, or if you don’t want to wait every three months to find out, you can go to one of several sites. Among the best: https://www.morningstar.com, run by fund tracker Morningstar Inc.

You won’t have to pay for this service, but you will have to register with Morningstar. (Be sure to register as a “free member.” If you register as a “premium member,” you’ll have to pay $9.95 a month.) Free membership will gain you access to Morningstar’s Portfolio Manager program.

There, you can list all the funds you own in your 401(k). Then, click on the “X-ray” button and Morningstar will tell you exactly what your asset allocation is, based on the company’s extensive database of what each fund owns.

Another option: https://www.investmentdiscovery.com. Once you type in all the funds you own, this site will calculate how your total holdings are allocated among stocks, bonds and cash. Plus, it will tell you how much money you’ve invested in specific sectors and how much you’ve invested in specific stocks through those funds. You may learn, for instance, that you have no money in technology stocks. Or conversely, you may find out that you have too much money in the volatile technology sector for your risk tolerance.

Mutual fund information on this site is free, though you will have to pay for information about individual stocks.

* Check on how each of your specific investments is doing. Your 401(k) statements may tell you how each of your investments have done. But often they won’t tell you how well those funds have done relative to their peers.

To find this out, once again go to https://www.morningstar.com. On the top left-hand corner of the page, you’ll find a place to type in the name of your fund. Once you do that, Morningstar will give you several pages detailing the fund’s performance over time, its relative performance against its peers over time, its rank in its specific category and Morningstar’s opinion of the fund.

Fund analysts will often advise you to be wary of a fund that consistently finishes in the bottom quartile of its peer group over long periods of time.

* Get e-mail updates on your 401(k) investments. If you list your funds in the “eFunds” section of https://www.investmentdiscovery.com, the site will e-mail you monthly reports on each fund, letting you know how they’re doing, what they’re buying and selling, and how they’re allocated.

For instance, if your large growth stock fund is all of a sudden starting to invest in small stocks, this should send up red flags.

* Search for news about your individual funds. Is there any breaking news about your fund that may affect your decision to stick with it? For instance, what if the fund just switched managers? Go to the online broker E-Trade’s Web site, https://www.etrade.com. There, you can type in all the funds and stocks you own in your 401(k) and get news about each throughout the day. Like Morningstar’s site, E-trade requires you to register to get this information, but registration is free.

* Keep track of your overall 401(k). Any number of sites, including https://www.quicken.com, https://www.etrade.com, and https://www.schwab.com will let you track the performance of your portfolio.

* Find out what the odds are of meeting your retirement goals. For free, you can go to https://www.financialengines.com, plug in information about your investments, your assets, and your goals, and this company (co-founded by Nobel prize-winning economist William Sharpe) will let you know what the odds are of meeting your goals. More specific information and guidance will cost you, though.

* Get actual advice on investing in your 401(k). Many employers today have deals with third-party investment advisors to offer recommendations, via the Web, to their plan participants. This guidance might come from a major plan sponsor such as Fidelity or Vanguard Group. Or it might come from a smaller firm, such as Financial Engines or MPower/401(k) Forum. In most cases, if this information is provided via your plan sponsor, you will not have to pay out of pocket for it.

Some employers offer this directly through an intranet.

* Find out how to improve your retirement plan in general. If you go through a quick retirement planning questionnaire at https://www.quicken.com, you’ll get a sense of how you’re doing and, more importantly, some basic steps you can take to improve the odds of you meeting your goals. The program might recommend that you save more money each month through your 401(k). It may also tell you that you should be investing more in small stocks or foreign stocks.

* Learn more about how 401(k) plans work. Check out https://www.401kafe.com. The site, run by MPower/401(k) Forum, will tell you exactly what the rules are for contributing to, investing in and withdrawing from a 401(k). Plus, if you’re really stumped, the site will allow you to pose a specific question to Ted Benna, president of the 401(k) Assn. and the man who helped create the nation’s first 401(k) plan.

Other good sites for basic 401(k) and investing information: https://www.vanguard.com, run by mutual fund giant Vanguard; and https://www.mfea.com, run by the Mutual Fund Education Alliance, a no-load mutual fund industry group.

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Do you have ideas for mutual fund and 401(k) topics for this column? Times staff writer Paul J. Lim can be reached at paul.lim@latimes.com.