Author Topic: My father's retirement account dropped $40,000 in a day - is this right  (Read 1887 times)

caffeine

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Not the way I want to spend the last of the year, but my dad just called me in a panic because his retirement account dropped $40,000 in a day.

He has everything in Fidelity Freedom 2020 fund: FPIFX

As of a few hours ago it is showing the fund down significantly for the year - It was at $17.50 and now it's at $14.91.

Would this have something to do with them closing the fund out? Is it right?

https://finance.yahoo.com/quote/FPIFX/

Frankies Girl

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Re: My father's retirement account dropped $40,000 in a day - is this right
« Reply #1 on: December 30, 2019, 07:06:11 PM »
They just distributed long and short term cap gains. You can see them here:

https://www.fidelity.com/mutual-funds/information/distributions#/?table=estimated

This is completely normal and happens every year practically. Fidelity generally does a smaller dividend/cap gain twice a year. This fund looks to do a smaller one in May, then the larger one in December.

They haven't updated the fee/dividend/cap gains section for today yet, but it will show up there shortly:
https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/315793505

They reduce the share price but a specific amount but then pay back in dividends or cap gains and reinvest them so the net result is more shares of whatever fund, but at a reduced share price. They will do the reinvest by end of day tomorrow (see the first link for the execution or EX date as today and settlement date or pay date is 12/31)

NO loss of actual money unless he doesn't have that fund set to automatically reinvest and takes that in cash out of whatever account...

« Last Edit: December 30, 2019, 07:10:00 PM by Frankies Girl »

MaaS

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Re: My father's retirement account dropped $40,000 in a day - is this right
« Reply #2 on: December 30, 2019, 07:06:56 PM »
Not the way I want to spend the last of the year, but my dad just called me in a panic because his retirement account dropped $40,000 in a day.

He has everything in Fidelity Freedom 2020 fund: FPIFX

As of a few hours ago it is showing the fund down significantly for the year - It was at $17.50 and now it's at $14.91.

Would this have something to do with them closing the fund out? Is it right?

https://finance.yahoo.com/quote/FPIFX/

The fund went "ex dividend" today. This means that the stock price was adjusted by the amount that shareholders will receive as a dividend and/or return of capital.

In short, your dad is about to get a distribution of about 40k.

MDM

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Re: My father's retirement account dropped $40,000 in a day - is this right
« Reply #3 on: December 30, 2019, 07:58:30 PM »
Your dad is probably one of many with this concern.  It even merits a sticky thread at Bogleheads: [Why did my fund suddenly drop in value?] - Bogleheads.org

In short, see previous posters' explanations.

MustacheAndaHalf

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Re: My father's retirement account dropped $40,000 in a day - is this right
« Reply #4 on: December 31, 2019, 09:49:26 AM »
Another way to double-check this wasn't a problem: login to the account online, and notice the overall balance is the same.  There will be lower fund assets, but a large chunk of cash - the gains and dividend others have mentioned.  So besides trusting the advice above, you can also login online and verify it.

terran

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Re: My father's retirement account dropped $40,000 in a day - is this right
« Reply #5 on: December 31, 2019, 12:06:58 PM »
Another way to double-check this wasn't a problem: login to the account online, and notice the overall balance is the same.  There will be lower fund assets, but a large chunk of cash - the gains and dividend others have mentioned.  So besides trusting the advice above, you can also login online and verify it.

Not necessarily true. I'm pretty sure my Fidelity account balances have dropped for a day or a few a number of times this month between dividend record and payable dates of various funds and ETFs. Basically, between the time you're eligible for the dividend and when the dividend actually posts to your account it makes sense that account balance would go down since the fund value is now lower to account for the owed but not yet paid dividend. .
« Last Edit: December 31, 2019, 12:08:33 PM by terran »

caffeine

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Re: My father's retirement account dropped $40,000 in a day - is this right
« Reply #6 on: December 31, 2019, 12:58:10 PM »
Thanks to everyone above that explained the issue.

Another way to double-check this wasn't a problem: login to the account online, and notice the overall balance is the same.  There will be lower fund assets, but a large chunk of cash - the gains and dividend others have mentioned.  So besides trusting the advice above, you can also login online and verify it.

What prompted my post was the discrepancy showing in the account balance. Only one tab had shown historical balances that included the missing funds.

Frankies Girl

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Re: My father's retirement account dropped $40,000 in a day - is this right
« Reply #7 on: December 31, 2019, 01:08:07 PM »
Fido usually does have their EX date on a Friday, with the settlement date that following Monday, so you go through the weekend with your account showing that activity and sometimes the amount reduced until they get it settled. It can be disturbing if you weren't aware how they do things.

Promise tho that if you auto reinvest, they do reinvest the same day to take advantage of the fund's new pricing/drop, it just won't show up til the next business day.

Much Fishing to Do

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Re: My father's retirement account dropped $40,000 in a day - is this right
« Reply #8 on: December 31, 2019, 01:15:30 PM »
Another way to double-check this wasn't a problem: login to the account online, and notice the overall balance is the same.  There will be lower fund assets, but a large chunk of cash - the gains and dividend others have mentioned.  So besides trusting the advice above, you can also login online and verify it.

Not necessarily true. I'm pretty sure my Fidelity account balances have dropped for a day or a few a number of times this month between dividend record and payable dates of various funds and ETFs. Basically, between the time you're eligible for the dividend and when the dividend actually posts to your account it makes sense that account balance would go down since the fund value is now lower to account for the owed but not yet paid dividend. .

Yes, I've noticed its not even very consistent within my Vanguard funds (I have two different funds with the same listed ex-dividend and payable dates and the dividend showed up on different days).  I'm sure this does confuse/freak out many who happen to look on the wrong day and don't know why.  I surely won't tease...I once had a dividend auto-paid to an account I had hidden in Quicken cause I didnt think I as using it anymore and was confused for weeks....