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Chapter 7. Keeping Tabs on Your Account > Check This Checklist … Frequently - Pg. 77

Keeping Tabs on Your Account 77 For What It's Worth Most record keepers provide "personal rates of return." This figure is valuable because it truly tells you how you're doing, investment return-wise. What most of us do now is read the local newspaper or Internet site, searching for that all important YTD (year-to-date) performance number. The only problem is, the return you're squinting to read only applies to the money you had in your account on January 1. Each contribution has its own return history. To determine a Personal Rate of Return you need to calculate the actual return by money source (contributions, earnings, loan repayments, match, etc.), weight the source for however long the money has been in the account, and add them together. This is a task perfectly suited for computers. For traditional valuations, it's a little more complex. Most likely, your investment elections go into effect at the next valuation date, which is at the end of the month or quarter. Usually there is a deadline for submitting changes, which can be a few days or a few weeks before the valuation date. The record keeper reallocates your accounts anywhere from a few days to a few weeks after the valuation date. So, your changes don't go into effect immediately. If your plan has an IVR system, it might be a few weeks or more before you can learn about the reallocated balances. If your plan doesn't have an IVR system, you won't learn of the new account reallocations until you receive your next statement. The bottom line is that a long time can elapse between when you submit your election changes and when you can check up on them, so you'll have to mark your calendar to remind yourself to check up. Suppose your accounts currently look like this. (We've put in parentheses the percentage that each fund represents of the total.) Nice and stable value fund: Large company stock fund: Hot small company stock fund: Exciting international fund: Total: $15,128 $10,383 $5,476 $3,533 $34,520 (44 percent) (30 percent) (16 percent) (10 percent) Now suppose you elect to reallocate your accounts, such that you want 35 percent in stable value, 40 percent in S&P 500 Index, 15 percent in small cap, and 10 percent in international. Now here's how your accounts should look. Nice and stable value fund: Large company stock fund: Hot small company stock fund: Exciting international fund: Total: $12,082 $13,808 $5,178 $3,452 $34,520 (35 percent) (40 percent) (15 percent) (10 percent)