Thread: 401K protection

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  1. #1
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    401K protection

    So with all the concern and market reaction to trade wars, I have been sitting back and watching a steady decline in the market just as everyone else has. As i do see the long term it becoming beneficial to us, the current term (2019) I foresee a downward decrease in the market for the rest of the year.
    With that being said, I am still at the point of double digit returns for the year and would like to protect / lock them in. My current thought is to move all 401K that is in stocks into government treasury bonds. This will remove me from the market fluctuation to an extent, good or bad. My theory behind this is if I continue to play this 'game' of riding market trends upward and then securing and getting back in when market stables, what are some unforeseen issues I may have? I recognize that I will potentially miss out on a good trend potentially but at 31 years old, I see plenty of time ahead in life that if I start piggy backing double digit returns back to back (granted based on market performance) it will solidify myself a little more secure than just some one riding the waves?

    I am self teaching myself through the 401k and stock market as I do not have very many older folks who understand it as it is not pertinent to them and most of my generation ether doesn't know a single thing or doesn't enroll into one. Just looking for some feedback and thoughts on my potential moves as to what could happen or other options that may be out there.

    Also if any one knows of any good podcasts or books to read I would appreciate the suggestions. My new thing is during tournaments instead of talking to myself in my head the whole 8 hours, listen to podcasts and learn while enjoying the fishing!

  2. Member
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    #2
    The problem is you will never get out at the perfect moment and never get back in at the perfect moment. Sometimes it will work and sometimes you will lose. And repeat this success over 30 years and there's like a 99% chance you underperformed someone that just stayed put.

  3. Electrical/Wiring/Trolling Motors Moderator CatFan's Avatar
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    #3
    Unless you plan to retire soon, the way to protect your 401 is to leave it in the market.
    If you have integrity, nothing else matters. If you don't have integrity,
    nothing else matters.​

  4. Stocks/Investments Moderator boneil's Avatar
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    #4
    How would you determine when is a good time to get back in? How would you define stabilize? We're only down 6% from all time highs. Would you then buy when we are up several percentage points after we are down how much? When we are down is when you want to buy. At your age, be thankful for sell offs, it gives you better prices to buy. And when we get a recession and some real sell offs like 25%+ thats when you max out an IRA with everything you can. 50% down, and you open your own investment account with an online brokerage and just start buying every month.

    You start locking profits when your 50 plus. Retirement accounts are meant for investing for the long run, buy and hold. If you want to time markets, that is trading, open a trading account.
    Thanos was the hero

  5. Member
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    #5
    Yea so the theory of when to come back in always comes up. Only answer is when the dice get hot again! ha. No real theory of when just seemingly after this trade deal blows over. Would be a short term removal. After reading on here and speaking with a few different people around seems like I'm going to give up on that idea anyhow. Just so risky trying to predict the market well enough to be able to get back in at the right time..

    Next question... Target funds.. too me seems to be another way the financial institutions to make money by managing your money and take the percentage..looking at historical trends why would I not just put into 100 percent into S&P index fund and just let it take me to the end? Very few have beat it over a 30 year period yet the advisers keep saying 'no you need to diversify." Is it because they are not making any money on it due to nothing to move around and low maintenance? My current portfolio is 'managed' by Voya but really thinking of just taking it out of their hands and doing it myself. I have done basic formulas to see where would I be if all was in S&P with compounding interest compared to where I am currently and it is not really too far off.. But not too far off at this age can be very off in 30 years. But why let them keep taking their compounding 2-3 percent? seems like that can just be made up in the index fund.

  6. Member
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    #6
    I’m 75 and I just moved 90% of our investments into FDIC CD’s last year. Looking back over the years now, I think that the best thing for a young person is, put as much as you can into a 401K or IRA, but invest it in the right stocks or funds. A 401K invested in the wrong funds won’t make you well for retirement.

  7. Member
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    #7
    Instead of getting all the way out you could also take some gains and build a bigger cash position to buy if it falls further. I always try to keep some cash in accounts to buy when it goes down. But you still have the timing problem just to a much lesser extent.

  8. Member
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    #8
    Quote Originally Posted by Rondel41 View Post
    So with all the concern and market reaction to trade wars, I have been sitting back and watching a steady decline in the market just as everyone else has. As i do see the long term it becoming beneficial to us, the current term (2019) I foresee a downward decrease in the market for the rest of the year.
    With that being said, I am still at the point of double digit returns for the year and would like to protect / lock them in. My current thought is to move all 401K that is in stocks into government treasury bonds. This will remove me from the market fluctuation to an extent, good or bad. My theory behind this is if I continue to play this 'game' of riding market trends upward and then securing and getting back in when market stables, what are some unforeseen issues I may have? I recognize that I will potentially miss out on a good trend potentially but at 31 years old, I see plenty of time ahead in life that if I start piggy backing double digit returns back to back (granted based on market performance) it will solidify myself a little more secure than just some one riding the waves?

    I am self teaching myself through the 401k and stock market as I do not have very many older folks who understand it as it is not pertinent to them and most of my generation ether doesn't know a single thing or doesn't enroll into one. Just looking for some feedback and thoughts on my potential moves as to what could happen or other options that may be out there.

    Also if any one knows of any good podcasts or books to read I would appreciate the suggestions. My new thing is during tournaments instead of talking to myself in my head the whole 8 hours, listen to podcasts and learn while enjoying the fishing!
    When the market is up, I tend to skim some of my gains off and put them into a short term money market, or treasuries. Then when it looks like things are down, I put the money back into the market, generally into the same fund or stock. I avoid the wash rule though. Sometimes I win, sometimes I am too early or wrong. Right now I am about 30% short term treasuries or short term CD.

  9. Member Bob G.'s Avatar
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    #9
    To the OP or anyone else that is in their 30's, I would use your 401k's investment planning for a very aggressive investment strategy. You have a long time to ride out the highs and lows. Start moving funds to safer investments, like bond funds, when you get into your 50's. The best thing you can do is max out your 401k, if possible, to reduce your taxable income and maximize the amount for retirement.

    I'm 58yo and have 33% in bond funds with the rest in foreign/domestic stock funds for continued growth. I go through Fidelities online planning a couple of times per year an make changes then.
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