Can't just play ping-pong all day.
Sales of Why I Left Goldman Sachs are apparently not brisk enough for Greg Smith to retire on, so he’s got a new plan: Retire on your retirement savings. Specifically, he’d like you to give him $15 a month so that he can put his complicated algorithm to work for you. The complicated algorithm appears to be: “find the cheapest available product and invest in it.” A bargain, he doesn’t mind saying.
Blooom’s main offering is a service that, for $15 a month, will take control of your 401(k) and manage it for you. (The fee drops to $1 a month for 401(k) accounts of less than $20,000.) The company uses a computer program to devise an asset allocation (bonds vs. stocks, for example) for each of its clients. It then looks at the investment options in your 401(k) plan, deciphers what they are, and separates those choices into categories. Blooom then, essentially, picks out the fund in each category with the lowest fees and puts your money there. Blooom’s investing algorithm doesn’t seem to take into account how those particular investments have performed. But I guess the assumption is the lowest cost option will be an index fund, so performance really doesn’t matter.