Company SIMPLE IRA Question

[GCinOKC]

Thank you in advance to anyone that takes the time to read and give me some advice, input, etc. on this! I looked around via the search tool, but this was kind of specific to my situation so I decided to post a new topic/question.

I work for a small general contractor in OKC and they offer a SIMPLE IRA plan through the company with 3% match. I have taken advantage of this since the beginning of 2012. Long story short, I'm only able to contribute 3% on my end as well right now. So I have only been able to put in $3,236.24 for 2012, $3,276.94 for 2013, $3,701.28 for 2014, and then this past year I was able to put a little more in due to a raise and some bonus money and put in a total of $6,054.58 for 2015. These numbers all include my 3% and the company match 3% combined. That comes to a total of $16,269.04. Here are my concerns...

The SIMPLE IRA is through Ameriprise Financial so I'm sure that isn't ideal to start with. The "holdings" are in the Ameriprise "VP Moderate Aggressive Class 2".

I understand things are not going well right now for the market, however, in 2012 I showed a gain of $111.94, 2013 was a gain of $668.44, 2014 a gain of $328.56, and 2015 a loss of $337.50. This would result in only actually gaining $771.44 over 4 years or about 4.7%. That seems really bad to me...is it? Also, since January 1st of this year I've put in an additional approx. $300 yet my current balance is $15,921.89. So I've lost $1,418.59 in just 3 weeks (2015 ending balance was $17,040.48 + $300)??? That's over 8% of my total account in 3 weeks. I know things are bad, but that seems outrageous. As for the Ameriprise fee, all I can find is a yearly $30 fee that shows up on anything on my account "activity". I realize I'm not the most educated on all of this and I plan to really start reading up more and trying to understand what is going on specifically with this account as well as the future accounts I had intended to open.

So I guess what I'm asking is, what would you recommend I do with this SIMPLE IRA account with it performing so poorly over the past 4 years and essentially just blowing money left and right? Secondly, should I even continue putting money in this account if it is losing money faster than I can put it in? I had planned to open two personal IRA's for my wife and I this year through Vanguard, but they would be Roth IRA accounts and obviously have no contributions from the company.

Thanks again,

Grant

[Her]

If it's a "Moderate Aggressive" class, I'd guess it's probably heavy on stocks. Stocks are doing badly right now, so any portfolio with a heavy balance in stocks is going to be doing poorly. This doesn't have anything to do with Ameriprise. If you open a Vanguard IRA, it'll be the exact same. That's just how the market goes.

If you're not comfortable with losing money when the stock market does badly, you need to look at your asset allocation and your risk tolerance. You can reduce your risk, but also reduce your returns, by looking at what percentage you have invested in bonds vs. stocks. Bonds have low risk and low returns. Stocks have high risk but overall high returns--over the long term. Four years isn't very long at all. Ten years is like the bare minimum for looking at how stocks have done, so you shouldn't be worrying at this stage. JLCollin's stock series (http://jlcollinsnh.com/stock-series/) is a good place to do some reading up on investing in the stock market if you're a beginner. And you have to realize that's what your IRA is doing: investing money in the stock market.

One thing that might help ease your mind is to realize that you haven't actually earned or lost any money at all. Your losses are unrealized, meaning that they aren't locked in until you sell the stock. If you sell now, like to move your money to something less volatile (bonds or a savings account or something), then and only then will you have lost money. The same is true of your returns. Your investments may have grown 4.7% over the last four years, but until you sell them, you don't have that money and therefore haven't actually yet earned anything.

This post by MMM is also a good intro: http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market/

If you've only had this IRA for four years, then you're probably still decades out from hitting the age where you can withdraw from it directly without penalty. Even if you use a Roth IRA conversion ladder you're still at least five years from being able to use it at all. So I wouldn't sweat the short term.

[GCinOKC]

Thanks for the response! That all makes perfect sense. I suppose I was just a little shocked that my current balance is less than what I have actually put into the IRA account since the past few years things were supposedly "doing well" and my year end balance versus today was a $1,400+ difference. However, I get what you're saying and yes 4 years is no time considering I won't be looking to retire for about 30 years from now. I suppose I probably won't do much else with this account outside of the 3% match for now. I'm still trying to build up my 6-12 month emergency fund and start the Roth IRA's for my wife and I so I'll just let this money continue on in the SIMPLE IRA through work and see how things look in a few more years. I don't think I'd want to shift money into bonds if I'm not even hitting 5% "return" over the past 4 years as that would likely drop even more.

[Her]

My retirement account is a bit older than yours, but I started investing in taxable accounts just this past summer, at the peak of the market. It's been all downhill since then, so I understand the disappointment and frustration. What I told you is really just what I learned myself trying to figure out how to deal with it, so I feel you! Don't worry, you're not the only one feeling the hurt. Just stay the course!