Question about 401K balance allocation

odanny

Diamond Member
May 7, 2017
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Midwest - Trumplandia
My 401K is at an all time high, mainly because today it is up 42.22%, a percentage I've never seen before.

While some funds in my self brokerage account are largely responsible for this rise, the managed funds have seen more modest increases. My question is would now be a good time to roll my managed funds, around 50% of my portfolio, into bonds, and leave my self brokerage funds to ride or die against future fluctuations?

I ask because I'm barely over a year from retirement, and don't want to lose these gains.
 
I put all of mine in an S&P 500 low fee mutual fund and let it ride.

My wife is much more careful because she doesn't have faith in American the American stock market.

It will differ by company, not all 401Ks are the same.

That's good for asset preservation, but I'm still working, and I'll probably keep my portfolio with Alight when I retire. I also might buy up some high dividend stocks, but then market fluctuations can hurt you
 
That's good for asset preservation, but I'm still working, and I'll probably keep my portfolio with Alight when I retire. I also might buy up some high dividend stocks, but then market fluctuations can hurt you
Less than a year from retirement, have you made yourself debt free? If not, do so, taking whatever kind of tax hit you have to.
 
I put all of mine in an S&P 500 low fee mutual fund and let it ride.

My wife is much more careful because she doesn't have faith in American the American stock market.

It will differ by company, not all 401Ks are the same.
I put 2/3 in an S&P index fund and the rest in bonds
Worked for over 30 years

I am now retired and keep the same ratio
 
My 401K is at an all time high, mainly because today it is up 42.22%, a percentage I've never seen before.

While some funds in my self brokerage account are largely responsible for this rise, the managed funds have seen more modest increases. My question is would now be a good time to roll my managed funds, around 50% of my portfolio, into bonds, and leave my self brokerage funds to ride or die against future fluctuations?

I ask because I'm barely over a year from retirement, and don't want to lose these gains.
/----/ I've been fully retired since 2016 and I'm still an active trader with an aggressive portfolio. I mostly trade weekly options and generate $200k a year. Being safe isn't in my investment strategy. Sure I have some great ETFs and dividend-paying stocks that are set up on DRIP. Personally, I stay away from bonds. The yield won't even keep up with inflation. But, hey that's just me.
 
My 401K is at an all time high, mainly because today it is up 42.22%, a percentage I've never seen before.

While some funds in my self brokerage account are largely responsible for this rise, the managed funds have seen more modest increases. My question is would now be a good time to roll my managed funds, around 50% of my portfolio, into bonds, and leave my self brokerage funds to ride or die against future fluctuations?

I ask because I'm barely over a year from retirement, and don't want to lose these gains.
rebalance your portfolio

I don't know what your allocation mix is but at this point it should definitely not be a growth dominated mix
 
If I had taken this approach, my portfolio would not be up 42% this year. And many stocks are far from maturing.
Other than Real Estate and stocks, most investments are no better than keeping your money under your mattress
 
odanny Congrats on your upcoming retirement. Historically speaking we are way overdue for a significant stock market correction or worse. It would be a very stressful situation to see double digit losses (even if just on paper) in your stock accounts when you are just retiring. Going majority cash and bonds makes sense.
 
odanny Congrats on your upcoming retirement. Historically speaking we are way overdue for a significant stock market correction or worse. It would be a very stressful situation to see double digit losses (even if just on paper) in your stock accounts when you are just retiring. Going majority cash and bonds makes sense.
Yea, I think you're right, I've read mixed reviews on bonds though, and holding them until maturity often means you not only don't make any money but you can lose a little. I like the idea of just having half my portfolio in cash, and holding the other stocks in industries that I think can weather a recession. I don't want to lose these gains, and I probably need to recalibrate.
 
Completely debt free, with cash savings to go with my 401K. Will have a small pension, $1500.00 a month
You got this, man. Enjoy. You've earned it.
 
I put all of mine in an S&P 500 low fee mutual fund and let it ride.

My wife is much more careful because she doesn't have faith in American the American stock market.

It will differ by company, not all 401Ks are the same.

This has actually been studied. Women look to mitigate risk in their 401K's and men will swing for the fences. People with the same pay, matches, and contributions of different genders tend to become world's apart in 401K value in just a few years time.
 
If I had taken this approach, my portfolio would not be up 42% this year. And many stocks are far from maturing.
If you leave your portfolio exposed to the more volatile areas of the economy you run the risk of losses that you won't have time to recoup.

There is not a financial adviser out there that will tell you to chase high returns in your 60's.

That doesn't mean you can't own growth stocks but those should not be the bulk of your portfolio after retirement.

You have to now preserve your assets so you can live of them
 
The only way not to lose any of those gains is to remove them from market risk. You have a couple of decisions to make.
  1. How much of a loss is acceptable
  2. How big of a market drop do you want to guarantee against?
Lets say your market investments are worth $1,000,000 and you don't want to see it fall below $900,000.

If you foresee the possibility that the market could fall no more than 25% then you need to expose only $400,000 of that million to market risk
For a fall of no more than 20% you can expose $500,000 of that million to market risk
For a fall of no more than 15% you can expose $666,667 of that million to market risk

Good luck and best wishes. Retirement is great.
 

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