Is it better to change your 401k stocks when the market is down or up?

Question

I need to change my 401k to more high risk options, should I wait till it gets better?

Answer 1

You should periodically review your 401 holdings. There is no such thing s a "good: time",or a "bad time" but you should do it on a regular basis, perhaps quarterly, and let the quarterly statements you receive be a reminder to do it.

Right now , the market is down. It may be the right time to change, a lot of people who do will do it and do very well. However, no one can make any guarantees.

Good luck.

Answer 2

High risk stocks likely will take longer to recover from the bottom, but will go up faster once they do. So the best strategy is to hold less risky stocks, let them go up, then switch to higher risk stocks.

Answer 3

A simple way to look at the market is when the market is down, shares are on sale. Especially when looking at mutual funds which you probably have in your 401k.

Now high risk is not always the answer. If I was you, I would compare the past performances of the various funds. Try to find a 10 year average over 15%, of course, the higher the better.  And the longer the fun has been around, typically the more stable it is, compare all the past returns vs. the market. Also look at the expense ratio, the lower the better.

High Risk, means big gain or big losses. If you are trying to make money in the long run, look at the performance.

If person A put 5000 a year for 7 years into a mutual fund that earns on average 10% starting at age 23. At age 30, if they decided they wanted to invest in other things and stopped putting money in that fund, they have invested a total of 35K.

If Person B started at age 30, and put 5000 a year in for 30 years, into the same mutual fund that averages 10%, they would have invested a total of 150K.

Well since person A started early he reaps the rewards. At age 65 he would have 1.5 million after investing only 35k.

Person B at age 65 will have 1.5 million as well, be he invested 150k.

So believe me, look at the performance  of the fund. Who cares high risk or low risk.

This is about as much as I can put in here, let me know if you need more info.

Answer 4

I would go ahead and make those changes, since the market is down, you will have more buying power and get more shares of a specfic fund.

Keep in mind, don't throw all your money into one fund, you have to balance it out so you don't take huge hits across the board. Diversity is important!!

Answer 5

Do it now!!!

The high risk options are cheap now and it is a great time to get in.

You are very smart to become aggresive now when stocks are on sale.