A Financial Advisor Told Him To Move $50K Out Of His 401(k) Into A Traditional IRA In 2021. Five Years Later, He's Only Up $2K

In 2021, a 34-year-old investor followed what sounded like standard advice. He rolled about $50,000 from his 401(k) into a Traditional IRA with the help of a local financial advisor. Then he did what many people are told to do with retirement money.

“I’ve for the most part ignored it as that was always the advice I was given,” he wrote in Reddit’s personal finance community recently.

Five years later, when he finally checked, the account balance was just over $52,000. After one of the strongest multiyear stretches for U.S. stocks in recent memory, his retirement money had barely moved.

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“Holy hell, you missed four of the best years ever,” one commenter wrote. “It should be roughly double if it’s in an index stock fund.” And as another person said, “You would have made more money in a high-yield savings account.”

Several commenters ran the math. A simple investment in a low-cost S&P 500 index fund starting in early 2021 would have turned $50,000 into roughly $85,000 to $95,000 by now, depending on dividends and timing. Even conservative alternatives like Treasury bills or money market funds would have outperformed the account’s actual return.

One highly upvoted comment summed it up this way: “You have actually lost money if you factor inflation over that time period.”

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As the discussion unfolded, a few explanations kept coming up.

First, fees. Many commenters assumed the advisor was charging around 1% annually. On a small account, that fee alone can quietly eat into already modest returns. “A 2% fee over 40 years will eat like half the gains,” one person warned.

Second, overly conservative investments. Multiple commenters speculated that the advisor may have placed the money into bond-heavy or income-focused funds. Rising interest rates over the past few years hit bond funds particularly hard.

“A 20/80 stock-bond portfolio would have about that return,” one person said, adding that such an allocation made little sense for someone in their early 30s.

The original poster later confirmed that the IRA was spread across several funds, including one called Bluerock. Others quickly pointed out that this fund had produced returns well below even basic cash alternatives over the same period.

“That is worse than a [money market fund],” one commenter wrote after calculating the long-term performance. “This is gross negligence.”

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Other commenters reassured him that moving an IRA is straightforward. “Just called Vanguard and it was super smooth,” one person shared. “They walked me through everything.”

Some also suggested services designed to help people evaluate advisors before committing. WiserAdvisor is a free service that helps match you with pre-screened financial advisors based on your goals, investment style, and comfort level with risk. You answer a few questions, and they connect you with vetted advisors so you can compare your options before committing.

The silver lining, according to most commenters, is timing. The investor noticed the problem now instead of 10 or 20 years later.

“Nobody says ignore your money,” one commenter wrote. “They say don’t obsess daily, don’t panic sell, don’t time the market.”

Read Next: It’s no wonder Jeff Bezos holds over $250 million in art — this alternative asset has outpaced the S&P 500 since 1995, delivering an average annual return of 11.4%. Here’s how everyday investors are getting started.

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This article A Financial Advisor Told Him To Move $50K Out Of His 401(k) Into A Traditional IRA In 2021. Five Years Later, He’s Only Up $2K originally appeared on Benzinga.com

A Financial Advisor Told Him To Move $50K Out Of His 401(k) Into A Traditional IRA In 2021. Five Years Later, He’s Only Up $2K

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