Optimizing Your 401k with Microsoft Excel 365 | Ray Harkins | Skillshare

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Optimizing Your 401k with Microsoft Excel 365

teacher avatar Ray Harkins, Senior manufacturing professional

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Taught by industry leaders & working professionals
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Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

16 Lessons (1h 8m)
    • 1. 01 Introduction to the Course

    • 2. 02 Why Invest in a 401k

    • 3. 03 Ticker Symbols and Fund Focus

    • 4. 04 First Step in Your Analysis

    • 5. 05 Populating Your Worksheet

    • 6. 06 Formatting Your Worksheet

    • 7. 07 Conditional Formatting

    • 8. 08 Sorting Your Performance Data

    • 9. 09 Summary Statistics

    • 10. 10 Finalizing Your Worksheet

    • 11. 11 Introduction to Investment Strategies

    • 12. 12 Short View I

    • 13. 13 Long View I

    • 14. 14 Fund Focus I

    • 15. 15 Some Closing Thoughts

    • 16. 16 Conclusion

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About This Class

In "Optimizing Your 401k with Microsoft Excel 365", you will learn simple, yet highly effective methods for monitoring and analyzing the performance of your 401k retirement plan. You will also learn several approaches for using these analysis results to build your own investment strategy.

This course is NOT designed for financial professionals, math wizards or computer programmers, but for the rest of us ... the ones that are working hard and trying to save for retirement, but aren't always sure how to allocate our money.

By the end of this course, you will be able to use the cloud-based tools found in Excel 365 (or Excel for the Web) to build a spreadsheet customized to your company's 401k plan that draws in real time data from the internet. You will then learn strategies for allocating your retirement savings based on your spreadsheet and your own personal goals and threshold for risk.

If you're tired of feeling lost about which funds to invest in, or always seem to pick the mediocre fund in your 401k plan, this is the course for you. In about an hour, you will have an easy-to-use, real-time tool that can guide your 401k investment approach for years to come.

Meet Your Teacher

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Ray Harkins

Senior manufacturing professional


Ray Harkins is a senior manufacturing professional with 25 years experience in manufacturing engineering, quality management, and business analysis.  During his career, he has toured hundreds of manufacturing facilities and worked with leading industry professionals throughout North America and Japan.  He is a senior member of the American Society of Quality, and holds their Quality Engineering, Quality Auditing and Calibration Technician certifications.  Ray has written extensively for national trade publications on the topics of quality engineering and career management.

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1. 01 Introduction to the Course: Hello re hearkens here from the manufacturing Academy. Thank you so much for joining me for this introductory video to the Skillshare class titled optimizing your 401 k with Excel 365. If you're anything like me, you're a working professional. You're doing the right thing. You're saving your money, you're putting it into your 401 k, you or taken advantage of your company's matching plan and you're anticipating someday being able to use that money to fund your retirement. And as your work longer and longer, this turns into a bigger and bigger pile of money. That's very exciting. But one of the frustrations I had some years ago was that no matter what font I stuck it into, I always felt like, gosh, I'm behind the curve. There's other funds that are doing so much better. I spent years putting my money into the age matching plan, the retirement date fund, 2030, 2035, 2045. And it's a great system, but so often I found myself like my gosh, any number of these other funds in by 401 k plan would be performing better. And no matter what I did, I'd read the finance magazines. What trends are hot, what's how to balance your, your your retirement plan based on your age and risk and things like this. I always felt like I was behind the curve. So anyway, I took what I learned as an engineering manager, a quality manager about trend analysis and applied it to my 401 k plan. Now, any 401 k plan, any mutual fund. And when you're ready and perspectives, they'll say that past performance is no guarantee of future results. And I completely agree with that. It's not a guarantee of future results, but past performance undoubtedly is an indicator of future performance or a predictor of future performance. So what I did was I applied what I learned about data analysis and trend analysis from quality management and manufacturing process analysis. And I applied it to my 401 k in the context of Microsoft Excel 365, the reason it's important that you have a version of Excel 365 or Excel for the web, is because those two programs, I think there's an Excel on a Mac Excel for the web two is because those programs have our Cloud-based. They can reach out into the Cloud and draw data and inserted automatically into your spreadsheets. So what I'm going to teach it to do in this class, to build a simple, easy to use spreadsheet that will characterize your entire 401 k plan. And it will show you not just the basics like the the fund name and the symbol, but it's it's one week and one month in one year, et cetera, performance and its expense ratios. All the things that you need to understand to make good decisions about your investment strategies. So I'm going to teach you how to build this in Microsoft Excel 365. Then I'm going to share with you some key strategies that may fit your personal age and risk profile. Then I'll show you how to adapt those strategies for your own needs. And at the end, I'll kick you off into making one of these spreadsheets for you. And the neat thing about the spreadsheet that I'm going to build for your show you how to build is that you can share this with your colleagues. This isn't just for you, this is for anybody, your friends, your coworkers, your colleagues in the same 401 k plan as you. So its very adaptable, very useful. And with some simple tools and strategies, you'll will find that the returns you're gaining and your 401 k will increase substantially. That's the bottom line. So anyway, thank you again for checking out this class. I sincerely hope you sign up for it. When you sign up for this class through Skillshare, if you're, if you're a brand new to Skillshare, you sign up for this class, you get a two-week trial to not just this class, but to the entire Skillshare portfolio. That's a tremendous benefit if you're already a member of Skillshare, come on in, take the class, I promise you, you'll learn some simple but effective strategies for optimizing your 401 k returns. So again, thank you so much. I look forward to working with you in this class to optimize your 401 k. 2. 02 Why Invest in a 401k: Now before we start talking about how to build your spreadsheet in Excel 365 and the various strategies for optimizing your 401 k. I just want to talk a little bit about the 401 k itself. If you're new to this retirement plan or maybe you're not even investing in your company's 401 k. This is the video for you. It'll help all of us get up to the same level of knowledge about what is it that we're actually talking about. So imagine you're a single person and you're making $50 thousand per year. In 2021, your current federal marginal tax rate is 22 percent. That means that for every dollar you earn over, so I think it's around 41 thousand for every dollar you earn over this threshold, up to a much higher number, you pay 22% of that in tax. So in other words, for every dollar your company pays you, you have to take 22 cents of that and send it to the federal government. So a 401 K helps you reduce that tax burden through your investments into that retirement plan with pre-tax dollars? Let me explain this. Let's just again, you're making 50 thousand a year. You're a single person. Let's just say you take 8 percent of your income, $4 thousand, and divert it to your 401 k retirement account so you don't get that money. In other words, you only took 4 thousand away. Now you only get $46 thousand. The $4 thousand goes into a retirement account. It's still your money, but you can't access it to somewhat later in your life, I think around 59 and a half. So you're taking the pre-tax dollars and putting it over there in which you can invest in mutual funds and different bond funds and and various index funds and things that are contained within this 401 k plan, you can invest those dollars. So if you're a saver, if you're thinking down the road, you'd like to retire. You want to take care of your family and you don't have to work into your eighties. You know, you have to save for your retirement. So if you did not divert that money into your 401 k and he just took it home, you would you'd pay the 22 percent tax on that today, you're only going to walk home with $3,120. Even if you were to invest that into a mutual fund, into stocks, into bonds, you're starting at 30, 120 versus 4 thousand. So the number one advantage really of a 401 k is it allows you to invest a higher number at the beginning and it allows you to invest more money that can grow over time. This growth has compounded growth as your account gets bigger and bigger and bigger, your percent, your annual percent growth each year becomes more and more money. So which starting with more in the beginning, allows you to have far more in retirement than you would even if you took that same money, paid taxes, and then invested into, into some mutual funds. So the, the, the tax advantage there or the investment advantages tremendous. You still have to pay tax on that money. And that leads me to number 2 is you still have to pay tax on that money. But the advantage is that you don't pay the tax on that money until you take it out. So presumably let's say you're 30 years old today and you're going to retire at age 65. That's 35 years from now. So for 35 years this larger amounts been growing, growing, growing at a much faster rate. That was advantaged number one. Advantage number two is that when you take the money out, you have to pay tax on it. But maybe your kids have moved away from home. Maybe your house has paid off, maybe you've downsized your home and all of your expenses are probably going to be lower. So the amount of money that you take out is going to be lower than it was say at the peak or certainly the rising part of your career, which means that you'll probably be in a lower tax bracket when you pull the money out. So your tax rate on that money probably will be lower when you take it out. That's a tremendous advantage. The third advantage, which is tremendous as well, is that most companies offer what's called a match to your 401 k investment at various company, the company. So if you don't know what your company's 401 k match is, you're going to have to ask your HR manager, but let's just go hypothetical. Here's a typical example is that, is that let's say that 8%. So maybe your company's policy is for every percent of your income, up to 8% that you divert into your 401 k, they'll match with a 0.5%. So if you take, again 8% of your $50 thousand, that's your $3,120 a year that you put into your 401 k. Well, the company in that policy, they'll match it with another 4% of your income. Or about what does that 15.1600, $1600 and change. So if you don't invest in your 401 k, you are leaving money on the table in most cases. So if your company is willing to match an extra 0.5% forever percent you, you, you put in there while you're leaving money on the table, you're not taking the money that the company is willing to give you. And again, in the spirit of investing over the long-term. Now you're not only starting with 8% of your income, but it's now actually 12 percent. So that's a much bigger number to start with. So over these 10, 20, 30 years or more before you actually take the money out. This much bigger number times that compounded growth each year. It's a huge amount of more money. So if you're, if you have, if you haven't thought about this yet, I would encourage you. Please think about this. It's four, I'm gonna say 98% of people, this is going to be something you want to take advantage of. It will allow you to save for your retirement. It will accelerate your retirement savings and it will lower your tax burden. So That's my pitch on 401 K's, if you're not currently investing in one, not even sure if your company has one or what the policies are. Talk to your human resource manager, talk to your boss, find out if they have a 401 k program. And if so, how do you get involved with it? I think it'll in the long run, I genuinely believe it will help you out tremendously. 3. 03 Ticker Symbols and Fund Focus: So really the first step in this process is to get an a clear idea of what available options you have to invest two, in your 401 k, you can do this off of your paper statements if you get those. Most people these days are working online. So here is my I've logged into my retirement account. My company uses American Funds and you'll find here these different tabs, most people over here and my portfolio and contributions anyway, for, for American funds, its investment options, you're going to have something like that in your 401 k. But look for the place where all of the investments are available that you can take a look at. So as I scroll down here, I see all the different funds that I have available to me and I'm I'm kinda scroll and by really fast, but let's just stop and take a look at a couple of these because there's a few pieces of information you really want to have here. So what you'll have here, and we're just going to start with this first fund. What you're going to have here is the name of the fund. This is called AMP CAP. Then you're going to have the ticker symbol that is very important. Then in this category, notice I've AMP, CAP, euro Pacific growth, the growth fund of America, et cetera. But notice they're all under this heading growth. So that growth is important as well. So, so really the two bits of information you need, R grow the fund type or strategy, which would be called growth and the ticker symbol. In this case I am CP x, it's going to be five letters. Let's scroll down, take a look at another like here, small cap world. But again, it's important that this ticker symbol, SMC wx, That's the important bit of information. You don't even have to write down the name of the fun, just the ticker symbol. And then I keep scrolling their investment strategy like here. This is growth in income. This is equity, balanced bond. And every one of these funds, again, the bond fund of America, the investment strategy is bond and the ticker symbol for the bond fund of America, a, b, and d x every one of your funds is going to be categorized in this way. Now, here's one of the most popular categories in almost every 401 k that I'm familiar with, it's going to be called something like target date funds or retirement target dates. These are the funds that are they're going to have a year in it. So the idea is that you'd pick the year you're going to retire or something close to it. Maybe you're going to retire in 2040 year 2030, Nine or something. So one of the ideas that people, companies like the American Funds do and fidelity and all these other ones, they, they set up these target funds. So the target funds, in this case, four people there. They're designed for people that will retire around 2040. It's just a conglomeration of all of these other funds up here, cash and bond, and balanced and equity and growth, et cetera. But they, they combine them together into a fund that is supposed to be geared toward people who going to retire around this time. So it's a, it's a maybe 10 percent of this, 20 percent of that, 5% of that. But it's these collections of all the other mutual funds that you have available to you. So these are really common and you're going to probably find those. So in my 401 k, I don't know, I looks like I have about 25 or 30. And the key is to write down every one of the ticker symbols and its associated investment strategy. Everyone, even if you're not invested into it, don't worry about that. It's important to grab every single one and write them down or copy him right into Excel 365. 4. 04 First Step in Your Analysis: So here I am in Excel for the web. Using Excel 365 works as well. Either one, I think there's a version for Mac that's all Cloud-based. The important part is that it's, that it's a Cloud-based version of Excel that you're using. And all I've done here is I've started two columns. One I call fun focus, the other one I call ticker symbol. So we were talking about the ticker symbols. These are the ones that we found in our 401 k brochure or the website or the statement, this is every the ticker symbol for every single fund that I have available. Looks like there's 28 different funds I can get involved with. Then what I did was I just typed in manually what that investment strategy, that fun focus or fund strategy was. And if you remember, we had some target date funds in mind. We have bond, we had growth, we had all these different funds. And then all I've done here is sort alphabetically, that's not even necessary. I just did it because I wanted to. So this is the first step towards your analysis, is starting to new columns, entering all your ticker symbols, and then entering the fun focus associated with each of those symbols. 5. 05 Populating Your Worksheet: Now this next section is really where the magic starts to happen. And, and when I first discovered this, I was amazed at how easy this is to bring in this external data into your very own spreadsheets. So you have the symbols, you have the Focus Fund or the fun focus, I'm sorry. Over here, highlight your ticker symbols and then copy, and then just move right over to the next column over and paste. Super straightforward. Okay, now what I want you to do and this, this pops up little, little message about financial advice there. So what I want you to do is highlight this column, the new column, you just create it and then come over here to data. And again, in this cloud-based version, Excel for web or Excel 365, you're going to see this symbol right here, datatypes, you're going to see stocks, highlight your ticker symbol, click on stocks, and then double-click viscera or just slide it over so you can see what's going on. If you double-click on it, it'll open up to the right amount. But, but most importantly, look what just happened. It looked up your fun symbol and automatically put in the description for it. So what I want you to know now notice it's still highlighted. This little information box right here should be right on that top cell. Click on this and check this out. Change, change percent, country or region expense ratio. These are all attributes of the mutual fund that you can just click on and it'll automatically populate. So here's what I would recommend you doing. Click on price, do this first clip price. See how that populates. Don't, don't change anything. Just click on this one more time and then go to down here, these are performance ratings. So return for one week right there, and then click on it again, return for one month again. And then you have one month and then you have three months. And then click keep clicking. So after three months you have one year. And then if you want, which I think it's a good idea, click on three years. And then I like to put one more in called the expense ratio. Now, we're going to get back to all this stuff in a moment here, but take a look at this menu now if you want something else like return, year to date, or the asset, net assets of the company. Go ahead and do that, that's fine. But for the basic format MOOC and mostly need is these performance metrics. And before you forget what all this stuff is, I just like to type in the description. You can do the formatting later price and then this is one week, one month, three months. Then this is one year, three years. And the expense ratio. Okay? If you can get that far, That's a great start. So next video we're gonna do some formatting and I'm going to explain what some of this stuff means. 6. 06 Formatting Your Worksheet: Now since you're going to be using this spreadsheet for years to come. I'm a big fan of making it visually attractive. So I'm just going to recommend some basic formatting options. First click on this top row right here. And you want to click Wrap Text right here. So that allows you to see everything on one line. Maybe you want to open this up a little bit, that type of thing and then highlight the whole thing. Let's do some borders around this. I think it helps. I know it's not. There's no way that it reads just the same borders are no borders, but make it visually appealing. You're going to be using this a lot. So make it easier to read if you want to enlarge the font size, do that. Another trick you can do if you know this I had already had I made it bold and gray. So yeah, maybe highlight this top line, make everything bold, add a gray contrasting gray color. Maybe throw a border around it. Okay, that makes it a little bit easier to read. I know it doesn't really amount to much, but I think it's a little bit easier to read. Okay, so now let's just talk about what do we have here in front of us? We already know what's going on over here. Now we have the description, then we have the current selling price. So this is the cost of one share of, in this case, the American Funds, Washington Mutual. That's the price of one share of that if you were to buy it today. And then here's what we have. These are the return. So in the last one week, for instance, I'm just going to look at this top mutual fund right here. In the last one week, American Funds, Washington Mutual, has lost a core of three quarters of a percent of its value. In one month it has gained 2.9. And this and then in three months It's three-point to four. Now in one year it's gained 31.5%. That's a very nice increase. I think the market student really well, three years, this is 13.75% per year. So that's how that works. And then the expense ratio is actually the percentage of your money that you have in the fund that the Washington Mutual, the American Funds people take Annual LEA. That's their cost of managing the fun. So sometimes you'll see like great returns on a fun. But then you realize, well gosh, the expense ratio is pretty high. I like to throw that in here because the expense ratios do vary. Sometimes it's a deciding factor on what to include in your 401 k and what not to include. 7. 07 Conditional Formatting: Okay, let's keep going. I think by now you're probably already getting a sense of how powerful this could be in managing your 401 k. But let's keep going and get all the tools in place. And then we'll talk about different ways to use our spreadsheet here are optimizing spreadsheet. So what I'd like to do myself and just start with this one week column. Ha, highlight the entire one week column, just that data, not the header, just the data. And then come up here to conditional formatting. There's a little drop-down menu. Go to this top bottom rules, and then go over here to top 10 percent. And this menu over here is going to pop up. So basically what it's saying is that we want to highlight a cell in a particular way that represents the very top crust, the very top number, most positive number in the entire data set. So the first is we want to make this a top. And I'm going to recommend even making this 5%. And I'll show you why here in a little bit. And then what if it is in the top 5% of all the data points? What are you gonna do? Let's highlight this in his green with this, with the green lettering too. And then just hit Done. Now notice what just happened here. One of my cells popped up and it's highlighted in green. Okay, but let's keep going. So highlight that again. And then back to Conditional Formatting and top bottom rules. And now let's go bottom 10 percent. But that's just a preset. We want to probably make it bottom 5%. And then we're going to leave this here, format it with this reddish box and red font done. So what this just did was highlighted are most positive, which is point 1, 0. And if we look at this whole list, I see a lot of negatives here. So I'm going to say point 1, 0 is the most positive. These look almost equal. And then again, a lot of negatives, but the most negative, the worst performing stock is this negative, 0.306, worst-performing Mutual Fun. So now what I can do is highlight that column. Now I'm gonna come over here to copy. And now I want you to just click on the one month, the first data point in the one month and come down, Paste dropdown, formatting. And look what happened. It just highlighted the most positive in our green and the least positive or most negative and our red. Click over to three months. Paste, paste formatting, repeat for one year. Paste, paste formatting, three years, paste, paste formatting. And you can get a sense of what's going on here. Okay, now, let's just take a pause for a second. We want to do the same thing to our expense ratios, But it's a little bit different in this case. Let me close this. In this case, expense ratios. The lower the expense ratio the better. So now we want to format this. We want to go, let's see right here, Conditional Formatting and top bottom rules, top 10 percent. So if you have a top 10 percent expense ratio, that's bad because they're charging you this money. So again, let's make a top five. That pretty much narrows it down to just one in most cases. Now, if it's top five, that's going to be in red. So it's opposite of our monthly and weekly in annual returns. So that's done. So there's our number one we can check that's our top expense ratio, 1.06 for the small cap funds. So we're going to repeat that process, highlight your data, Conditional Formatting, top bottom rules. Now we want the bottom 10%. We're going to change that to 5% and we're going to change this to green. Done. Okay, Let's take a look. What we have. Now what we've done is we've highlighted the best of each column in green and the worst of each column in red. It provides some nice visual cue. So you can see at a snapshot what the best and worst is for each performance metric. 8. 08 Sorting Your Performance Data: Now I want to show you a few tricks on sorting our data here. And after this video, I would just recommend you take some time, play around with your spreadsheet a little bit and get to know it. So let me show you what you can do here. Highlight the entire data set, including the column headers. Then you come over here to sort, sort, and filter custom sorts. Now, you have a few options here. Make sure this box right here is check my data has headers, so it eliminates this column headers, it doesn't sort those. Okay, so now you'll have a drop-down of each of the column headers. So pick one, I'll recommend, Let's just recommend three months. Three months, sort cell values and sort you want descending, which means the largest summit top to the bottom. So, so Largest to Smallest, most positive, two most negative on the three month column right here. Let's hit Okay, and see what happens. So what we just did there is we rearrange, asked every one of our mutual funds using this three month column from top to bottom. So in the last three months, our best-performing fund on the page has been this American Funds AMP CAP and our worst-performing fund on the page, it's lost point 12 percent is been our American New World funds. So it's not a surprise that the greens on the top and the bottom. So then what's interesting is once you realize, okay, this is what's happened in three months. Now you can kind of see, okay, this is the best-performing in three months, but how does one month look like right there? The the the best in one month we have green is Washington Mutual, but in three months, gosh, it's, it's less than half of the AMP CAP fun in three months. So, so mentally you start thinking like, okay, how is this one looking like this Washington Mutual, it's the best in a month, but gosh, it's, it's a negative territory for a week. So you start looking at how you can kinda compare the performance of any given fund by looking at its return across one week, one month, three months, one year, et cetera. So you can do the same thing. Highlight this. Now we looked at three months, maybe you're interested in one year, for instance. And again, play around with this and see what you can come up with format. And we want sort and custom sort. And now instead of three months maybe, let's, let's try one month and see what happens one month sort descending, which means biggest at the top, smallest at the bottom. Hit Okay, now we're sorted for the one month and we can see like we just saw before now that Washington Mutual pops up to the top. So I think these conditional formatting kind of a nice queue, a nice, a nice visual help to see what's going on for the one month, three month, the one week, for one week, the best is the bond fund. But if you look at over three months or even one year, well it's pretty far down. Look at one-year 0.75% when you have a lot of funds that are in the 30 something percent. So take a break here, play around with your spreadsheet and get used to the sorting. It's really fun to gain some insights on what's going on. 9. 09 Summary Statistics: Now let's take another step in adding tools to this worksheet that'll help us analyze the funds available to us in our 401 k. Clicked down here, skip, skip a row right below. In my case, skip row 30. Let's go to 31 and click right here under price. Now, there are a few summary statistics that I think are going to be helpful in analyzing your data. And that will be the max, the min, the average, and the standard deviation. I'll talk about that in a second. So now let's just enter some formulas here. Equals max. Open parentheses highlight the entire column of data, that whole data set and not the header row, just the data close parentheses. And that's going to return the max value, which is the point 1, 0. The conditional formatting helps, but I think the data table helps a little better. We're going to do the same thing for the Min equals MIN, open parentheses highlight the column of data. Close parentheses now equals average open parentheses. Same thing right there. And one more time equals STDEV. Open parentheses. Highlight, close parentheses, enter. So what this does for us, and I'm going to take this, I just highlighted that cell and I'm going to back up just a little bit there. That's pretty good and I'll change it to let me change that to a percentage just like that. Okay? So what this is doing for me is giving me some, some statistics. Basically, I have the max and the Min values which we had highlighted already. I have the average value. So in other words, if like in the one week, if I were to own one share from every one of these mutual funds, my return would be minus about 1%. And then the standard deviation is a measure of dispersion of the data. The higher the standard deviation that, the greater the spread of the data if you're not familiar with statistics. So what I'm just gonna do now is highlight that bit of summary statistics. Copy. And then I'm going to just go right here. You can go all the way to expense ratio. I don't know if it's that helpful, but you can women as well, it's not going to hurt anything. And then paste and then formulas. Now it is formatting in a bunch of decimals. I'm going to come here, hit percentage. Let's open this up a little bit to two decimal places and look what I have. I now have a data table. Let's highlight that. Put some borders around it, make it a little more readable, little more attractive if you want to, if you want to make these bold and border around that, I think it's a little more attractive. Okay, so what do we have here? Now I can see that I have my max and mins, but then I also have my average. I kinda know where is the middle of all this data. So just in a general rule of thumb, right? You want to be like above average, don't yeah. So like even for like one year, I know. Okay. My average return is 21.09% for one year of all these mutual funds. For me, I want to be above average, right? Especially when we're talking about my 401 k, I want to be above ours, so so that's me. But I, what I'm getting at is it'll give you a sense of what should be expected generally out of a one-year return, three-year return, one month return, just a general expectation. 10. 10 Finalizing Your Worksheet: Now one of the beauties of this worksheet, as it is currently format it is that it's generic. It it only applies to the 401 401 k program that you're involved with, you and all your coworkers? There's no personal financial information. I don't have how many shares do I own? How much do I have in my in my 401 k, Nothing personal is on this page at all. So what I like to do, I'd like to kinda keep it that way too. Why? Because you can email this to your friends, your coworkers, your boss. You can email this to other people so they can enjoy the benefit of using this as well. Now, if you wanted to expand, maybe how many shares you have and things like that, that's great. You can do that off to the right. But as it stands today, it's actually very generic. Okay, now I'm going to add one personalization that I still think is okay if you share it and I'm going to show you what I'm talking about right now. So this is where you want to look right now at your actual 401 k mutual fund selections there. So let's just pretend for a second that we have some percentage in this AMP CAP and highlight. I like to highlight the fun focus, the ticker symbol and the description highlight all that. And then let's make it yellow. And then let's say you have 30 percent there and you have 40% in your target 2035 retirement plan. So we had 30 percent, 40 percent. I think it was an okay. We have another Let's just say we have we have 10 percent there and we have 20 percent here. And that's actually the distribution. And more or less I just highlight the colors, you know, so highlight it. I don't indicate what my percentages. Again, if you want to type something over here like 30 percent or 40 percent, That's fine too. But for me to keep a generic yet personalize a little bit so I can remember. I just like to highlight these in yellow. Okay, Then what you can do now that you have a sense of, okay, this is what is in my mutual fund, my 401 k. Now you can highlight it and I like to just as a baseline, just as a starting point. I like to sort my data, custom sort, and I like to sort it by three months. It isn't. This has nothing to the strategy. I just like to know, it's just an easy way to figure out where have I been for the last quarter? Sort cell values sort descending and highlight. And there you go. In this imagined 401 k, and these aren't my selections. This is a real 401 k, but a minor in different ones. So in this imaginary selection of mutual funds in your 401 k, you have one that's really performing well for three months. The top dog really in three months, he got one that's about pretty much average. In fact, average is 2.85. This one's a three-point 19, so you're right in there. And then you have these two that are toward the bottom, 0.9.3 for various reasons that might be okay, but at least for right this moment, we know where we're at for the three month timeframe. 11. 11 Introduction to Investment Strategies: Now that you have your worksheet entirely built out, it's time to start using the worksheet to optimize your 401 k plan. So I'm going to talk about completely different strategies. Some things that I call the long view, the short view, the hybrid. These are these are approaches that you might use to optimize your 401 k plan. I'm largely just showing you how to use the worksheet according to some preset plans, what plan or what strategy is best for you. I'm not advising you on what that is. That's something you have to decide for yourself. And the way you decide what strategy is best for use by thinking about your, your risk threshold, your age, your, your strategy, how long you have until retirement. Advice from a financial planner or things that you're reading on Google, you have to decide that for yourself. So in no way am I suggesting that you should approach your 401 k in this way or that way? I'm not doing that. What I'm showing you is if you have a long view, for instance, then here's one way to format your 401 k Accordingly using the spreadsheet that we just built. So anyway, consider these different strategies and which one might be right for you or using one of my strategies maybe like my long view, you want to use as a starting point, but then adjusted. Maybe you want a little bit longer view, you want it a little bit shorter view. That's something that you have to decide for yourself. So the next several videos, I'm going to roll out four different plans. I'm looking at my notes here for different strategies. We'll call them that might work for you or you start with one and adjust accordingly. So enjoy the next few videos where I roll out some of these strategies. By the time you're done with it, you're gonna get a sense really good of how to use the spreadsheet and how to tailor it to your risk threshold, your goals, your years till retirement and all that stuff. So thanks so much for continuing to watch, enjoy the next few videos as I roll through these different strategies. 12. 12 Short View I: Okay, this first investment strategy, I call the short view one. Reminding you again, I'm not recommending this strategy, I'm just showing you how a short view strategy might work. This would involve placing 1 third of your total holdings in each of the top three funds according to their 90 day returns, then rebalancing every month. Okay, let's just do this really quick. So we highlight our data set. We come over here to sort, custom sort. Now, what are we doing? Top three according to their 90 day returns, their three month returns, that's 90 days hit. Okay, now we've already sorted. So let's just pretend this is where we had our funds already in these four. But one of them, we're doing great. We already got the top fund according to the 90 day return. This short view strategy would have us placing 1 third in this AMP CAP, 1 third in this American fun growth funds of America, and 1 third in this new perspective fund. So then maybe we do this on May 1st and then June 1st, we come back and we update this spreadsheet. And by the way, every time you open the spreadsheet, I just want to show you, you have to come data refresh all connections. So you refresh all connections. These don't update automatically. You have to come over and hit Refresh Connections. So then you say, Oh jeez, I want to follow this strategy here. I'm way out of balance. So then what you do is you delete these and you change these to no fill. And then you go back into your 401 k and rebalance it so you have 1 third, 1 third, 1 third, and then I like to update my spreadsheet. So, so it looks like that so I can remember, okay, these are the three funds that I'm in. 1 third, 1 third, 1 third, and then next month, see, these are going to move, you know, 30 days from now. This probably won't be the same sequence. Then you just decide, okay, I'm, I still happy. I'm an acetal happy. Okay. And just like I said in the introductory video, maybe you want to modify the short view. Maybe you want to look at the, you know, the one year return or the one month return. You can modify this in any way you want. Same thing with percentages. 1 third, 1 third, 1 third maybe ago, 50, 30, 20, or something like that. So anyway, here's just a quick overview of what I would call short view. One. 13. 13 Long View I: Now let's look at a very different strategy from the short view and take a look at a strategy that I call the long view 1. And I say one because could, because you can adapt it in various ways, maybe a two or a three. So let's take a look at what this strategy might entail. So this says place 1 third of the total holdings in each of the top three funds according to their three year returns. Now the one of the reasons I recommend breaking up 1 third of your total holdings into each of the top three. Well, each of the top three because you want to maximize your returns here. That's why you're taking this class. That's why you're building a spreadsheet. So you want above average returns. But that doesn't negate the value of diversifying. So by spreading your funds out, your total funds out into three different mutual funds. As times change and fun shifts and stocks go up and down, you're still going to be in a pretty good position even if one of those kinda performs just so, so or even, even just average or even below average, you still have to funds that are working for you. So diversity is still a standing principle in, in any of these views that I have. So again, top 1 third of total holdings in each of the top three according to their three-year returns. So I highlight. So the first thing I do, again, if I'm just coming into this for the first time, come over herded data, refresh all connections that brings in the most recent performance data. Highlight the entire table. Come over here to home and sort. We've done this a few times already. Custom Sort. Now we're, are looking for the three-year returns, cell values sort descending like that. So it's, this is recommending that you rebalance every year. Well, isn't it interesting that are, that are short view that produce the top three funds for three months is almost identical. The top performing mutual funds for three years, isn't that great? So, so anyway, these look, if you're up into this top area, you're doing pretty good in this, in this 401 k plan. So what do we do if this is our strategy right here, the long view one? Well, we're actually in pretty good shape. We've got number 1, we've got number 2, and now number three is the one that we're not in balance. So what do you do? You go back to your 401 k plan and you sell the shares that you have in AMP CAP, and you move that money over to small-cap world, and then you update this workbook accordingly. And again, if you don't open this for a month or two months or a year sometimes it's hard to remember. So when you come back, you'll see, okay, here's where I have my funds and then it allows you, even though you have some highlighting going on, it allows you to continue to share it with your friends and colleagues that are in the same 401 k plan. So there is an overview of long-view one. But again, I'm glad you're learning this plan, this strategy. But I also want you to think about ways that you might modify this longer view for yourself. 14. 14 Fund Focus I: Now this next investment strategy I referred to as fund focus one. So it is very common to receive good financial advice from maybe a certified financial planner, maybe from a friend or who's very sound in investment strategies. Maybe you do your own research and you learn that your age, for your risk tolerance, for your years to retirement, based on these input metrics that there's a optimal strategy. Maybe you learn that hypothetically, that you should have 80 percent of your 401 k and growth funds and 20 percent in bond funds. And this is based on your, your input metrics, your risk threshold and your age and all these other things. You have this strategy that you want to follow, I promise you, this still works very well for that type of strategy. So let's take a look again. I call it fun focus one, step one, determine your ideal fun focus. So hypothetically, this may or may not apply to you at all. Hypothetically, you determine that you want 80 percent of your 401 k into growth funds. You want 20% of your 401 k into bond funds, okay, so now we're going to sort our table again. And we're going to come over here and we're going to custom sort. But this time we're going to highlight fund focus. And now we want to sort this ascending. It doesn't have to be a sending, it just puts it in alphabetical order. So let's take a look at that first. So now what we have is we have broken up all of the mutual funds according to their fun focus. So we have our growth, we have growth in income, we have our target date funds, and they're all grouped together. Here's bond and some of these are just by themselves, balanced and cash equivalent. Then we want to divide up our holdings into the top two of each category according to their one year returns. So let's think about that. That means we want, we want to split in, in growth. We want to avoid the growth funds because we want 80% growth of the growth funds. We want to find the best to performing according to their one-year return. And then we want to split our funds 40 percent in the top growth, 40 percent in the second best growth. That's the basic idea. And then we repeat the process for bonds. Okay, so let's do this again, highlight the entire table, then come back to sort, then custom sort. So we've already sorted according to fund focus. Now we want to add a layer. So just click the Add button and then come over here to one year returns and then sort by descending value. So what that's gonna do is first it's going to sort by PFK-1 focus like we already did then within that group of funds, growth, growth income target date. Within that subgroup, it's going to sort those funds according to their one-year return in descending order. In other words, top to bottom. Let's click Okay and see what happened. So here we have a using our growth as an example. Here's our six growth funds. And if we slide over here to one year, we see the number one, it's not surprising, it's in green, right? Number 136.336%.6 is the small cap world and the number 2 performing Growth Fund according to the one-year 31.58. And you can see they keep descending, descending all the way down here, 24.98, the New World fund. So according to our, our preconstructed strategy, we want 80% of our 401 k in growth, So we can divide it 40%. Let me highlight these in yellow, 40 percent in a small cap world, 40 percent in the new perspective fund. Then we want 20% in our hypothetical strategy in the top two bond funds. So here's our bonds. If we come over to the one-year return, we see the best-performing bond, fun bond fund of America return 0.75, the worst negative 4.6% for the US government securities, okay? So we want to put in 20 percent total into bonds. So we could break it up 10 percent into bond fund of America, 10 percent into intermediate bond fund of America. Now what have we done? First of all, we have diversified according to mutual fund strategy that growth versus the bond versus the growth in income, we've diversified. Then within that fun category, like bond, we've diversified again and split it 5050 into the top to performing bond funds. Because even though we want to diversify, which is wise, it's a great strategy. You're doing this, you're taking this class you're building is worksheets so your portfolio can perform as well as possible. So instead of just picking any old growth fund wound should pick the growth funds that are performing the best. Now you're in growth, but you're optimizing your growth performance by picking the top two in that category. So again, that's called Fun focus one. Like all of these, these, these strategies, I'm, I'm Leonato. Yeah, you can adapt it to meet whatever whatever approach you want to take. But just an idea of fun Focus 1, it builds diversity into your portfolio. It brings in these external strategies that are built on, on history and great performance over the years. And you can do it all within the context of the worksheet that you built. 15. 15 Some Closing Thoughts: Now I decided to add one last video before the conclusion, which is the next video. And share with you a couple of thoughts. As I've taught this class many times online in-person, I've shared the spreadsheet with many, many people, colleagues and people I know and don't know. And I've evolved over the years in my thinking. So in my interactions with various people about this method, people have asked me, What is it that you do? How do you allocate your funds in your 401 k? So I want to share those thoughts with you just so you can understand what I'm doing. Maybe helpful to you as well. But I want to share with you two thoughts. First at both feed into why I have my particular strategy. And the first thought is that basically investing in a 401 k is a lot easier than investing in the market at large, maybe through a brokerage account because the limit, the available funds are so limited. Even a large 401 k with maybe 40 mutual funds that you can invest in. It is very small compared to all of the mutual funds in the world. All the bond funds, all the stocks, all the other things that you can invest in. And the folks like Fidelity and Schwab and these other companies that develop American that develops for one case, they narrow down the number of funds and they vet those funds very carefully such that armchair investors, just kinda ordinary folks are people that wouldn't even regard themselves as investors, have basically a safe, well-established, well-managed group of funds to choose from. So when you're investing out in the market, you have to do that investigation. How long is the fun bent around what's been their track record, who's managing it. You know, you have to think about some of those things where the people that design your 401 k have done so much of that for you already. So much of the general market risk has been removed from the equation in your 401 k. Thus, the alloy talked about diversity and I believe in diversity and a lot, it's not quite as essential because you don't have to diversify for certain types of risks because those those risks don't exist in your in your 401 k. So there's just a thought there that a lot of the homework has been done for you already. And the second part has to do with bond funds generally, and maybe you know or don't know about bond funds. But a couple generalities here. Generality number one about bond funds. And in our session, I think we see, I think my 401 k has three different bond funds. Yours may have more. Last hopefully at least three. But what I'm getting at is that bond funds generally have a couple of characteristics. One, they're much more stable. They tend to change whether it's up or down. It tends to be very slowly. It brings stability into a 401 k plan. So by investing in bonds, you're not going to make a lot, you're not going to lose a lot generally, okay? The other thing about bond funds is that in many cases they tend to work opposite of stock. So in other words, when, when, when stocks are going down, let's say, let's say the market, the stock market's doing poorly. The Dow Jones, the Nasdaq, and it's going down well. Big institutional investors and alike and anybody that they'd kinda nervous like, oh gosh, I'm losing money. Well taken money selling stocks, selling mutual funds that are invested in stocks, selling it and then diverting it to bonds is kind of a natural move because they noticed stability thing and as people pull their money out of the higher yield, yet higher volatility stocks and they put them into bonds. Well then the demand for bonds starts rising and then the price does as well. So generally speaking, not perfectly. There's an opposite effect if stocks are going down, bombs are going up, but again, not up at the same rate as stocks up slightly. So that's kinda how they work. So so as I've gotten older and a moving closer to retirement, I'm in my fifties now, so I got a few years but I'm moving closer to retirement. So I'm concerned a little bit more and more about how much money I have in there, end, the end then the size of the pot and has grown by itself too. So what I've done is I've gotten older, is I've allocated more and more to the bond funds that are available. Right now, I think I'm at about 35 percent of my total funds are in bonds. That's basically my base level. That's kinda where I leave it all the time. And then the other thing they do is that if I know there's an event that might cause volatility in the market, then I might move more over into bonds, at least temporarily. Let me give you an example. This is my opinion. My experience is that the stock markets don't care whether it's a Democratic president or Republican president. But the transition between the two, it doesn't like uncertainty change. People get nervous, people take money out, put it in very quickly. It causes volatility. Big changes, madam, if the country goes to war, natural disasters or big shifts in economic policies. These are the things that the markets generally get nervous about change results in volatility and you don't know whether it's gonna go up, go down, people get nervous, people move money around, okay? Once it stabilizes though, then you start seeing a pattern again. Once the political or economic event is over, then you see more stability and normal trends in the market. So when I know something's coming up, like a presidential election here in the United States. I know that for years there's gonna be some shifting around and people are going to get nervous and the stock market usually responds by, my experience, seen it go down or jump up and down a lot before presidential elections. So I may move more money over there temporarily until I can see who's the new president and what, what's going to happen. That's just an example. So some of these big shifts, you have no idea that they're going to come, you know, like a big natural disaster back in 9, 11, you know, you don't know what's going to happen. So I'm not saying you control everything but, but when you do know that, hey, there could be some upcoming volatility for me. That's when I shift back into 2020 general election. I was probably 75 percent in bonds coming into that that election. So that's my that's how I handle bond versus non bond. Okay? But now we have the money That's not in bonds. Okay? So what I'm doing with my, let's say 65 percent about where I'm at today is I am using the 90 day indicator as my main decision-maker. Okay, So let me, let me tell you what I'm doing. First of all, I'm opening up my spreadsheet at least monthly, practically speaking six or seven times, I've taken a look at it. One of my favorite financial advisors has this expression, money moves from people who don't pay attention to it. People that do pay attention to it. So I'm recommending you'd be one of the people that do pay attention to it. And one way easy way after you make this spreadsheet is simply to use it, open it up and see what's going on. See if you notice any patterns and things rising or falling. Okay. So open it up, look at it. So I open mine up every 30 days at a very minimum. Okay. Maybe you want to do the same thing, man, you to pay your electric bill, you know, the same time every month, a fifth of the month or the 15th of the month or whatever. Open it up, Take a look at it. So then what I'm doing is I'm looking at the 90 day, So I opened it up, I refresh my data. I have my funds highlighted in yellow so I can see what's going on. And then, and then I sort the whole sheet by the three-month performance and I rank everything largest to smallest, three months, and I take a look at it. My general goal is I want to be in the top third by the three month trial and I want to be in the top third all the time. Okay. Now, most 401 K's are going to have rules about how frequently you can make trades. For instance, one of the common rules is that if you sell a certain fungi, can't buy back into it for 30 days. That's one of the rules I see out there a lot. So again, opening it once a month for one K's are intended to be like day trading portfolios. They're not okay. So opening once a month, refresh the data. I look at my 90 days and I want to be near the top. So if I opened it up and I see, okay, I have the number one spot, the number two spot and the number 12 spot. I'm like halfway. I want to be in the top third. So I'm going to sell my position, sell my holdings in that number 12 spot, and I'm going to buy something and number maybe number three, number four, I'm going to buy something near the top. And then I'm going to let me, if it's if it's the number two mutual fund, these 40 for 90 days, well, probably it's going to keep performing well for the next 30 days. Maybe it won't be number one or number two, but I doubt it's going to be last, right? You know, that's just my guess. Probably it's not going to be last. Okay. So that's why I'm doing it the way I'm doing it. So anyway, the idea is to open a frequently and for me to stay in that top third of where I'm at. Now here's one other thing that I do also, I'll look at the 90 day performance. Maybe I have 1, 2, and 7. Well, another thing I like to do is move over to the one month column to see how is that number seven, position, fun, performing in the last 30 days sometimes why I picked that, bought that before. So maybe it was number one before. Now it's number 6, will say it's still in the top third. But if my monthly performance for the number six or number 7 is like in the bottom half. Well, I know something happened. Something happened the last month, maybe the last time I checked that it was doing good, but shortly thereafter turned the corner. Now it's sloping down. Okay. Technically I'm soma top third. But if I wait another month, well gosh, then I'll be I'm going to probably keep falling. So maybe that's an opportunity to sell my position, move it back up. So that's that's what I'm doing every month. I'm looking as long as I'm in the top corner. So if I go from number one to number 3, so what number two to number 4, you know, I don't have to be in that top spots every time, but I want to be near the top. Top third is my general rule, you know, so there's my basic strategy. I'll select a percentage of bonds based on my own personal risk threshold based on what I want to retire and how I want to stabilize my my entire account and then the rest. I'm looking at the 90 day performance every month. I'm looking at the 90-day performance every 30 days, you'll look at the 90 days, make adjustments. I want to stand the top ether. So there's my personal strategy. But again, I'm going to repeat it because I love it so much. Money flows from people who don't pay attention to it, to people that do pay attention to it. I'm convinced simply by building a spreadsheet, opening it once a month, Considering what some of the shifts in patterns and you're going to notice stuff that's not even in this class. You're going to notice your own patterns and ideas just by paying attention to it. I promise you this time next year you'll be in far better position. You'll be 25, 10 percent higher in your earnings, In your 401 k then you are today simply because your organize your monitoring, you're paying attention. So I hope this has been a huge help to you. Do it, put it into practice and I promise you, you'll get better results in a year than you are today. So thanks for checking in and out. We're about to conclude this class in the next video, Take care. 16. 16 Conclusion: Well, this is the end of the Skillshare class titled optimizing your 401 k using Excel 365. Thank you so much for joining me for this class. I genuinely hope that you learned a lot from it. Not just how to create the spreadsheet and analyze it, but that, that you could catch a vision of having a strategy can radically improve your returns over the long term. If you don't have a strategy for today or your whatever strategy or or retirement date fun you've selected as giving you dismal returns. I genuinely hope that you can utilize one of these strategies, the short view, the long view, or the hybrid, or you can utilize one of these to optimize your 401 k for maximum returns given your risk and age profile. So now it's your turn. So the step one, if you're not in a 401 k plan today and you're interested in it, talk to your employer, talk to your HR manager, get the details about their policies, how money was withdrawn, what their what their matches those details. And I can only encourage you to start somewhere, just start and then over as time goes on and maybe you get promotions and raises, you can adjust that to meet your evolving goals as you get older. So step one, get involved. Number to step two is if you are involved, then get into your 401 K's website or the old school paper statements, figure out what funds are available for you to invest in. Get all of the fun symbols and their investment strategy, the growth, growth in income bond, whatever those are, get the symbols, get the growth strategies off of your 401 k website. That's the starting point for making the spreadsheet, then follow the system from then on. So anyway, thank you again so much. I sincerely hope this helps you and your family to save money and invest that money in a way that maximizes your opportunity here, I love seeing people move ahead in their finances and their careers, in their personal goals. And I, and I sincerely hope that you can use this, these strategies to achieve your goals. Again, thank you so much for joining me, god bless you. And if you have any questions, feel free to reach out to me through Skillshare. I love hearing from students and if I could be of any assistance to you, shoot me a note and I'll reply to you within 48 hours again. Thank you. Enjoy your day.