Who needs Jim Cramer when you have Kevin McKee!?

I just checked my 2010 401k return on investment, and it was good. Really good.

Jim Cramer and Kevin McKee

"Ahhhh! Why can't I be as good at investing as Kevin McKee!?" - Jim Cramer

For a frame of reference, Moneychimp says the S&P 500 had a 14.32% gain in 2010, which is a pretty good year considering most experts project an 8-10% annual return in an average year.

My personal return on my 401k was 26.85%!

I got almost double the S&P 500. In fact, the S&P 500 is one of the four funds I held in 2010, and it was my worst performer.

I’m no investing expert, but I do understand the basic concepts of investing. One fundamental rule is this: the higher risk you are willing to take, the higher reward you can potentially get. My portfolio is extremely risky, and it paid off this past year.

Here are the four funds I have in my 401k:

  • Company Stock – 50%
  • S&P 500 – 20%
  • REIT Fund – 20%
  • Emerging Markets Fund – 10%

Is it smart to keep 50% of your 401k in company stock forever? Almost certainly not. Is it smart to have 50% of your 401k in company stock when your company has a great year, with plans to de-leverage at a certain price point? I’ll answer that question with this question: Is a 26% annual return good?

Is it also risky to hold 20% in a REIT fund, which stands for Real Estate Investment Trust and is essentially investing in property at a time when the real estate market is so depressed? The answer, of course, is yes. Remember, more risk means more potential earnings!

How did you do in your 401k? Were you afraid to make risky bets, and did it cost you potential earnings? Do you have a better mix of investments that not only had a higher return, but is also less risky? Do you think I’m stupid for leaving 50% of my 401k in the hands of my employer? There are so many discussion points here. Let’s discuss!

This post was featured in the Carnival of Wealth at ControlYourCash