401K thoughts?

[fnfarms1]

I've worked for Postal Service for 16ft s, started at 21 yrs old. Invested in my Thrift Savings from the start. I've always invested pretty conservative. Been using L funds because they require little attention. Been watching some different advice columns on investing solely in C and S funds until the last 5ish years. I've got minimum of 9 yrs to go probably closer to 15-19 if my body holds out, it's walking routes around town. 12-15miles a day.
Question is everyone thoughts and experience if you have dealt with 401K investing? I've been getting the matching funds, currently have 120k in there. Have no idea what number I'm shooting for. Although I did borrow 15k from it in the summer to buy my last truck. Don't heckle me for it, I know borrowing from retirement isn't ideal. wife was out of work and didn't need a payment. Needed truck for farm use after mine burnt.

Everyone says we are headed for recession, seems like now would be the time to jump in the volatile funds to catch the rise on the backside. Be like buying cows to sell when they get stupid after the sell off happening. Never a guarantee but good possibility.

 

[Travlr]

I've worked for Postal Service for 16ft s, started at 21 yrs old. Invested in my Thrift Savings from the start. I've always invested pretty conservative. Been using L funds because they require little attention. Been watching some different advice columns on investing solely in C and S funds until the last 5ish years. I've got minimum of 9 yrs to go probably closer to 15-19 if my body holds out, it's walking routes around town. 12-15miles a day.
Question is everyone thoughts and experience if you have dealt with 401K investing? I've been getting the matching funds, currently have 120k in there. Have no idea what number I'm shooting for. Although I did borrow 15k from it in the summer to buy my last truck. Don't heckle me for it, I know borrowing from retirement isn't ideal. wife was out of work and didn't need a payment. Needed truck for farm use after mine burnt.

Everyone says we are headed for recession, seems like now would be the time to jump in the volatile funds to catch the rise on the backside. Be like buying cows to sell when they get stupid after the sell off happening. Never a guarantee but good possibility.

The 401k offerings are listed as more or less "risk"... but none of them are much risk. First, because the funds are managed by people with great reputations for choosing investment material. But also because 401Ks are set up for long term investing and even in downturns you should expect the market to rebound at some point and the "riskiest" funds are most likely to rebound the most.
I've always chosen my investments in 401Ks based on the returns from the former quarter, always choosing the highest three/four offerings. The next statement I only change if the pick has lower returns than something else. Past performance is a good predictor of future performance.
And don't be afraid to opt out entirely if it looks like there will be a major downturn. Sell and leave the cash sitting in your 401K or buy bonds until the market turns. Selling early in a major downturn means you have more money to buy back in when the market begins to go back up.
I'll put my results up against anybody.

 

[fnfarms1]

The 401k offerings are listed as more or less "risk"... but none of them are much risk. First, because the funds are managed by people with great reputations for choosing investment material. But also because 401Ks are set up for long term investing and even in downturns you should expect the market to rebound at some point and the "riskiest" funds are most likely to rebound the most.
I've always chosen my investments in 401Ks based on the returns from the former quarter, always choosing the highest three/four offerings. The next statement I only change if the pick has lower returns than something else. Past performance is a good predictor of future performance.
And don't be afraid to opt out entirely if it looks like there will be a major downturn. Sell and leave the cash sitting in your 401K or buy bonds until the market turns. Selling early in a major downturn means you have more money to buy back in when the market begins to go back up.
I'll put my results up against anybody.

in my situation you say sell. Mine is setup in funds, some riskier or safer. To sell you mean switch funds?

 

[Caustic Burno]

Never invest more than your willing to loose.
All investment is at risk even frog hides buried in a coffee can.
Funds/stocks that gain big loose big.

 

[Travlr]

in my situation you say sell. Mine is setup in funds, some riskier or safer. To sell you mean switch funds?

I'm not telling you to sell anything until something breaks like it is a run on a bank. But when that is, is a judgment call. Don't buy back in until there is a rebound... another judgment call.

Again, "don't be afraid to opt out entirely if it looks like there will be a major downturn. Sell and leave the cash sitting in your 401K or buy bonds until the market turns. Selling early in a major downturn means you have more money to buy back in when the market begins to go back up."

Selling means turning your investment into cash to be held in your account which is not a good long term play. But there are times when it is better to be storing cash than owning funds/bonds. You can also sell so you can buy... basically swapping one for another.

 

[fnfarms1]

I'm not telling you to sell anything until something breaks like it is a run on a bank. But when that is, is a judgment call. Don't buy back in until there is a rebound... another judgment call.

Again, "don't be afraid to opt out entirely if it looks like there will be a major downturn. Sell and leave the cash sitting in your 401K or buy bonds until the market turns. Selling early in a major downturn means you have more money to buy back in when the market begins to go back up."

Selling means turning your investment into cash to be held in your account which is not a good long term play. But there are times when it is better to be storing cash than owning funds/bonds. You can also sell so you can buy... basically swapping one for another.

I don't think moving to cash is really an option. Only moving to safer or riskier funds.

 

[Travlr]

I don't think moving to cash is really an option. Only moving to safer or riskier funds.

Different services have different options.

 

[fnfarms1]

Different services have different options.

G fund is government bonds least risk and least returns. I'd guess that's the "cash" type fund

 

[puzzled in oregon]

I was able to sell investments within my 401k and roll the cash into an IRA with a different Investment Firm, that offered better/more investment opportunities. I have no real interest in getting back into the stock market at this point and time. So am settling for CD's. Not a huge return, but safe and FDIC Insured.

 

[puzzled in oregon]

You would not have to take all your money out of the 401K, the 401K can remain in place, and you and your employer can continue contributing to it. I was allowed to roll cash over to my IRA once a year.

 

[bird dog]

In all honesty, your choices are poor. Plus they are managed by the Woke company Blackrock. The C fund that matches the S & P is probably where you want to be but it has had crappy year (losing 13%) because it is weighted towards the most valuable companies. Since the most valuable companies are generally tech companies the index gets slanted in that direction. The fund is around 29% tech today even with the sell off of techs stocks. If they rebound, the fund will do fine. They may fall a lot further. The S&P is only 3% energy which means it has almost missed the best sector for the last two years.

I guess self managing your account is not a option? If its not, stay with the C fund. Its the most diversified despite its shortcomings. Don't try to time the market. Its a losers game. Investing the same amount week after week get you bargains during sell offs and keeps you buying as the market rises over the long term.

Life cycle funds are a good idea and you won't go wrong there but they double dip you on the fees since they are investing in funds where fees are already charged.

Maximize whatever the match you can get. That will help even out the poor choices they offer.

 

[fnfarms1]

In all honesty, your choices are poor. Plus they are managed by the Woke company Blackrock. The C fund that matches the S & P is probably where you want to be but it has had crappy year (losing 13%) because it is weighted towards the most valuable companies. Since the most valuable companies are generally tech companies the index gets slanted in that direction. The fund is around 29% tech today even with the sell off of techs stocks. If they rebound, the fund will do fine. They may fall a lot further. The S&P is only 3% energy which means it has almost missed the best sector for the last two years.

I guess self managing your account is not a option? If its not, stay with the C fund. Its the most diversified despite its shortcomings. Don't try to time the market. Its a losers game. Investing the same amount week after week get you bargains during sell offs and keeps you buying as the market rises over the long term.

Life cycle funds are a good idea and you won't go wrong there but they double dip you on the fees since they are investing in funds where fees are already charged.

Maximize whatever the match you can get. That will help even out the poor choices they offer.

Yeah I think moving to C fund is what I'm doing. Yeah I'm maxed on the matching side, repaying my loan as fast as I can. No self managing exactly what I'm buying isn't a thing.

 

[libertygarden]

@fnfarms1 I wouldn't be asking advice from ranchers and farmers about 401Ks . No offense to anyone here, but consult with an independent financial advisor that is not paid to peddle any particular flavor of funds or investments. That said, here is my piece of stupid advice. The market is always head for a collapse, nothing new. The market is currently discounted about 20%, so is your retirement plan, so if you sell now, not only will you incur tax penalties but you would also lose your shirt. If your time horizon is 10 to 15 years, I'd buy heavily into blue chip stock funds. Assuming a $50K salary, the $120K you have now, plus 15% annual contribution, plus your company match should easily turn into $500K if you have a 15 year horizon and are consistent and stop withdrawing funds to pay for cars.

Checkout Investopedia for a bunch of free calculators and free education.

 

[fnfarms1]

@fnfarms1 I wouldn't be asking advice from ranchers and farmers about 401Ks . No offense to anyone here, but consult with an independent financial advisor that is not paid to peddle any particular flavor of funds or investments. That said, here is my piece of stupid advice. The market is always head for a collapse, nothing new. The market is currently discounted about 20%, so is your retirement plan, so if you sell now, not only will you incur tax penalties but you would also lose your shirt. If your time horizon is 10 to 15 years, I'd buy heavily into blue chip stock funds. Assuming a $50K salary, the $120K you have now, plus 15% annual contribution, plus your company match should easily turn into $500K if you have a 15 year horizon and are consistent and stop withdrawing funds to pay for cars.

Checkout Investopedia for a bunch of free calculators and free education.

Loan to buy the truck wasn't ideal, as I said. And no I don't plan to do it again. Wife having cancer didn't really thrill me to take out a loan not knowing what the next year holds. Thanks for that though

 

[Caustic Burno]

Loan to buy the truck wasn't ideal, as I said. And no I don't plan to do it again. Wife having cancer didn't really thrill me to take out a loan not knowing what the next year holds. Thanks for that though

Remember this all financial advisors are peddling the same products under different names.
All of these 401 products are government approved and controlled to some extent.
What your looking for is the least slimy advisor that's not churning your funds.
Most company 401's are considered safe harbor investments.

 

[bird dog]

Sometimes a loan from your 401K actually makes sense if you pay it back promptly. If your gonna buy something on credit, might as well pay yourself the interest.
Of course you have to have some amount of self control to get this done.

https://www.investopedia.com/articles/retirement/08/borrow-from-401k-loan.asp

 

[libertygarden]

Sometimes a loan from your 401K actually makes sense if you pay it back promptly. If your gonna buy something on credit, might as well pay yourself the interest.
Of course you have to have some amount of self control to get this done.

https://www.investopedia.com/articles/retirement/08/borrow-from-401k-loan.asp

I've looked at this option. In today's environment with interest rates as high as they are it is very tempting to convince one self to put the hand in the cookie jar. Don't. If you happen to lose your job, the amount comes due asap and if you can't pay it back, then you'll be penalized as an early withdrawal and forced to pay taxes.

 

[u4411clb]

The idea of changing 401 allocations and timing the market before retirement is kind of an old way of thinking. Not asking your age but that way of think was when people retired at 65 and lived on average 2-3 or 4-5 more years. With people living much longer now it is conventional wisdom to stay invested. If you are looking at living 10 years or more on average the stock market will bounce back from this dip and even a dip next year. I gave this advice years ago to my parents my mom pulled her money at around 62 from 401k my father left hi invested during Great Recession. Needless to say they are both 78 and in good health now and any loss during recession my Dad made back probably 20 fold. And made good sums of money from staying invested.

I am not a financial advisor.

 

[Travlr]

The idea of changing 401 allocations and timing the market before retirement is kind of an old way of thinking. Not asking your age but that way of think was when people retired at 65 and lived on average 2-3 or 4-5 more years. With people living much longer now it is conventional wisdom to stay invested. If you are looking at living 10 years or more on average the stock market will bounce back from this dip and even a dip next year. I gave this advice years ago to my parents my mom pulled her money at around 62 from 401k my father left hi invested during Great Recession. Needless to say they are both 78 and in good health now and any loss during recession my Dad made back probably 20 fold. And made good sums of money from staying invested.

I am not a financial advisor.

In 2000 the market tanked. And all the signs were there to know it was going to take a dive. I worked with guys that stayed in and they lost their asses short term but made it back on the rebound. No harm, no foul, and they did just fine.
On the other hand I sold everything in April before the market took the plunge and hoarded my cash. I didn't take the hit that the "buy and hold" guys took. When I saw the market had hit bottom I bought back in for pre-downturn dollars at bottom-of-the-barrel prices.
Every financial advisor you ask will discourage this... because the big investment firms advise their advisors to sell buy and hold as a viable strategy. Warren Buffet advises it. I often think they use average investors to stabilize the market so they have a dependable playing field.
But the people that lose their asses sell after the stock tanks and then rebuy when it has risen. People that buy before the drop and rebuy at the bottom make much better returns than people that buy and hold.
Do you think Buffet is buying and holding? If he is... then why are you not getting the same results as he is getting?
I don't sit and study the market every day to find the best options... but I've made buys that returned 8 times investment in less than two weeks. Timing the market does not necessarily mean you are uninvested. It can mean you are invested and waiting in something safe until an opportunity arises where the risk is justified by the potential return.

 

[bird dog]

Maybe Travlr can time the market. For most, its a fools game. Just missing a few of the best days is very harmful to overall returns. Never trust a finacial adviser that practices market timing.

The Perils Of Market Timing: Missing The Best Days In The Market

2022 has been a rough year for investors. Nearly every corner of the market is in the red — stocks, bonds, commodities, and even gold.

www.wesmoss.com