Any 401K experts here?

I have my 401K thru Mass Mutual (www.massmutual.com). They have several investing options including conservative journey, moderate journey and aggressive journey. Also such options available are small, mid and large caps which I know nothing about and other stuff as well. As I still have a considerable time to go before retiring I have all my money in aggressive journey which over the years has done well. However it's lost nearly 3 percent over the past three months and I wonder if you think with a possible recession looming it might lose more. In 2002, it lost 19 percent although it then turned around and gained 30 percent in 2003.

Anyhow I'm thinking of throwing it all into the fixed interest for a bit and see how things shake out, what do you think/advise?

I think you have a good plan. You could leave it where it is, and it'll probably bounce back once the recession ends, but you'll temporarily lose the gains you made. The only risk here is that the market will rise while you're in fixed interest funds. Honestly, I don't think we'll see a bull market for a while. The trickiest part here is really figuring out when to get out of fixed interest so you can ride the market up again. Don't go with anything which has a fixed term, such as a CD, because that severely limits your options. And let's hope that the coming recession turns out to be just that, and not the start of something worse, as many are predicting.

My 401k from my last job got rolled over into a new 401k (company got sold to another company who rolled the old 401k's into their own). So when they sent me a letter asking me how I wanted to roll everything over. I told them to put it all into a stable fund. Essentially just a savings account with a flat % rate each quarter. I'll leave it there for now until it looks like the market is doing better. It's only ~ $19k but I don't want to loose any money.

I have 100% stock in my 401k, and went from a high of $29K or so to about $26K currently. It's still above my net investment. I'm not worried at all about it though, I have 35 years before I can draw out anyhow.

I strongly recommend not to play the market with a 401K. I have my entire 401K in the S&P 500 and have since the beginning. Some years, it will go down, but in the long run you make more money. Nobody can predict the ups and downs of the market--it isn't possible no matter what people say.

I've lost a lot of money in the past three months--tens of thousands--and it isn't fun. But overall, I'm still ahead, because I don't jump in and out. In fact, I was buying stocks weeks after the 9/11 attacks. It doesn't get much worse than that for pessimism, but by buying when people are getting scared, you get better performance.

Stay the course for the long term. Read up on The Fool.

Is Your 401(k) Foolish?

401k is 401 thosand bucks .the k means 1000

Lightraven said:

I've lost a lot of money in the past three months--tens of thousands--and it isn't fun.

Click to expand...

Not unless you've sold some shares during that period.

True, very true. All paper losses.

Lightraven said:

True, very true. All paper losses.

Click to expand...

When "Black Monday" happened back in 1987, my 401K was still rather new and I was very nervous about what would happen to it. Another employee who had worked there for years told me, "Don't worry. I've already lost about $30,000 today, but it doesn't bother me. I'm still years away from retirement, and the prices will be up again long before then. Right now, I'm glad the prices are low, because it means the money they're deducting from my paycheck can buy more shares this week than it did last week. Those will be worth a lot more by the time I retire." He was right, and that's what I've been thinking about as I watch the falling market this time. As long as everything's in good shape by about 2021, I'll be happy.

I put in fixed for now. It's possible circumstances might occur and I might have to draw from it this spring/summer. Hopefully not but just in case I don't want it to lose anymore. If things are ok then at that time I'll put it back in aggressive where it has been earning good money thruout the years.

Main problem with putting it into fixed income is that no one knows when to get back "in the market." Don't try it, almost never works. If you are still in the accumulation stage, you should still be buying a good mix of funds (small, mid, large-cap, international, bond) because you are reaping the benefits of dollar-cost averaging. Also, buying now means you get shares "on sale."

Also, remember that your horizon is typically longer than you think, unless you DON'T expect a long retirement.

Disclaimer: Above represents general investing information, not specific investment advice.

At the very least, consider this. You have already put your money into the stable fund. So be it. At some point you need to figure out when to get back into the market and the aggressive fund. When you decide the time is right, I would suggest putting it in with several small chunks, spread out over some time.

And an even bigger suggestion is to make sure your new money going into the 401k out of your paycheck goes into the aggressive fund and not the stable value fund. that way you have the advantage of buying the aggressive fund while it is low (now).

It all depends on your age. I've taken too much of a beating several years ago when I had my 401K in stocks. A couple years ago, I moved it into safer funds. It's not making as much assuming a healthly stock market, but the risk wasn't worth it to me. There's nothing like watching your quarterly statement go down each time, due to a messed up market.

Think beyond the quarter. If you have a long horizon until retirement at minimum you should be in an indexed equity fund. 30 year olds should not be overweighted in fixed funds . Historically equities give you the greatest return over the long haul. Trying to market time based on near term economic factors is a mistake. Stay the course. You don't think fixed funds took a huge hit when the Fed dumped rates 75 basis points? Do you really want to earn 3% this year? The troubles at AMBAC and MBIA will not help your "safe" fixed funds either. Unless you are a savvy investor, in the market daily, or qualified to give advice stay the course. Do not panic. Think long term. The money is in equity or at least an overweight to equity. More shares eventually mean more money. There is value out there and it is your fund manager's job to find it, not yours. That is why you hired them (or your employer did). Try annualizing quarterly or monthly returns for an equity vs a fixed fund from your provider for the last ten years. Which looks better to you even with a couple years of bear markets in there?

geepondy said:

In 2002, it lost 19 percent although it then turned around and gained 30 percent in 2003.

Click to expand...

What more needs to be said?

Remember that in the trade putting all of your money into fixed income is known as "going broke safely".
If you dont know what your doing get some professional advice - with a 401k you should be able to get it for free from your company.