Is Your 401(k)/IRA Money Growing the Way It Should?

3 Steps to Figure it Out

You’ve worked hard, saved a bit (maybe even diligently), and maybe you’re contributing to a 401(k) or have some money with a financial advisor. You feel like you’re heading in the right direction.

But here’s the real question: is your money growing in a way that sets you up for the future you want?

If you just realizing you have no idea how or if the money in your 401(k) or IRA is growing—you’re in the right place and it’s one of the top questions I get from women all the time.

And this is actually the same question I asked myself after setting up my Roth IRA in my early 20’s and then barely looking at it for the next 4 years.

In case you aren’t sure where this is headed, yes, it’s a big mistake to not pay attention to your retirement accounts and it can cost you and your retirement dearly.

Lower investment returns today could mean thousands—or even hundreds of thousands—less in retirement.

So if we want to make sure our money is growing like it should, this is a question worth answering and we can get started with just 3 steps below.

Why Women Investors Need to Pay Attention to Growth

Women face unique financial challenges—from longer lifespans to career breaks for caregiving and yes, still gender pay gaps (even when controlling for variables.) The potential changes and obstacles in a woman’s life continue to illustrate the importance of gaining and keeping financial autonomy.

But for most women, a perceived lack of necessary investing complexity keeps them from investing. Research from Ellevest reveals that women tend to keep $.70 of every dollar in cash—a move that feels “responsible” that prevents us from building wealth while the value of our cash disintegrates every year with inflation.

Realizing the opportunity cost of keeping your money in cash is painful—I would know. Between 2011 and 2015 I kept $45,000 I didn’t need in cash because I was afraid of losing it. Between those years, my simple investing portfolio would have returned 90%. Meaning that that $45,000 could have ~$85,000 if I had just invested it during those 5 years (in addition, this time frame includes one year of really poor stock market performance.)

So instead of ignoring our retirement accounts and keeping too much in cash, let’s make the decision today to take the first steps in understanding how our money is growing so you can get in the drivers seat of your financial future.

How to Gauge Your Portfolio’s Performance

One simple way to get a sense of how your accounts are doing is by comparing them to the S&P 500.

The S&P 500 is a benchmark that tracks the performance of 500 of the largest companies in the U.S., including companies you’ve heard of like Apple, Amazon, and Coca-Cola. It’s widely used because these companies drive much of the U.S. stock market’s growth, making the S&P 500 a good tool to start to measure how your retirement or investment account is growing by comparison.

Here’s why it matters: Over the long term, the S&P 500 has historically delivered an average annual return of about 10%, and over the past five years, it’s averaged closer to 17% annually (before inflation).

If your portfolio’s returns consistently fall significantly below these averages, you might be leaving money on the table.

It’s important to note that the S&P 500 ONLY includes large US companies and this group of companies has outperformed other sectors of the stock market over the last 10 years. So if you are investing in other small US companies, international companies, and some of your portfolio is in bonds, you should expect to see a lower average return than the S&P 500 and to some degree, that’s okay. From my perspective, investing in just the S&P 500 is risky because you are only investing in large US companies which means your portfolio is less diversified.

Growth Takes Time

Before you panic, it’s important to understand that growth isn’t immediate or linear. Investments, like a well-planned garden, need time to grow and thrive.

The stock market naturally goes through seasons of fluctuation. Some years will be incredibly strong, and others might feel like setbacks. But over the long term, a diversified portfolio should reflect steady growth.

That’s why it’s better to evaluate performance over a 5 to 10 year period, rather than focusing on a single year. This long-term view gives you a more accurate picture of how your money is performing.

3 Steps to Evaluate Your Portfolio

If you’re ready to see how your investments stack up, here’s a simple process to get started:

1. Find the historical performance of your investments.
Log into your 401(k) or brokerage account. Look for the section that shows “annualized returns” over multiple time frames—like 1, 5, or 10 years.

2. Look up the S&P 500’s historical average return.
A quick Google search (see image above)—just type in “S&P 500”—and you will see a data table of the historical performance of the S&P 500. Now, you can compare your portfolio’s returns over the same time frames.

3. Compare your returns to the S&P 500.
If your portfolio is significantly underperforming the S&P 500, you may need to revisit your strategy.

For example:

• If you’re investing conservatively (e.g., with a larger percentage in bonds), your returns will naturally be lower than the S&P 500, but you should still see meaningful growth.

• Even with 20% your portfolio in bonds, an ~11%+ annual return over the past five years would still be reasonable.

• Even with 40% in bonds you should have seen an ~8%+ return over the last 5 years.

The Scary Impact of Underperforming Investments

To put this into perspective, let’s look at a quick example:

If you invested $50,000 today and earned the average S&P 500 return (10%), it would grow to $336,375 in 20 years. At a lower return of 6%, it would only grow to $179,085.

That’s a difference of over $157,000—money you could have used to retire earlier, travel, or create more financial freedom.

Don’t Forget About Fees

Another reason portfolios underperform is hidden fees.

Every single fund you choose or you advisor chooses on your behalf has a fee called an “expense ratio”.

If these fees are too high, they can quietly eat into your returns over time. For example, a 1% annual fee might not sound like much, but over 20-30 years, it could cost you tens of thousands of dollars in lost growth.

Financial advisor fees are also something to look out for—this is such a big mistake that CNBC even covered my story of how I lost out on thousands by hiring the wrong (expensive) advisor.

Reflect on Your Strategy

1. How confident are you in your investment choice in your 401(k), IRA, or other investing account?
   On a scale of 1 to 10, do you feel secure that your money is growing—or are you unsure if it’s enough?

2. What’s the long-term impact of staying where you are?
   If your portfolio keeps performing at its current rate, will you feel financially secure 10 or 20 years from now?

   On the flip side: Imagine knowing exactly what you are invested in and why? Imagine knowing your investments are set up to steadily growing toward your goals. What would that do for your peace of mind and your future?

Are You Ready to Do Something Different?

If you’re feeling uncertain about your investments or overwhelmed by where to start, you don’t have to figure it out alone.

You don’t have to wait to take control of your money—don’t miss my next free beginner investing workshop coming up soon. Learn more here and save your seat early!