Should I convert some of my Stocks to bonds?

Question

My stocks have been falling over the last couple of months but my bonds have been doing decent. I've never been into finance, but over the last month, my 401K went from $5500 to $4995.

Should I convert?

Answer 1

Great.... you'll switch from stocks to bonds... just as inflation may kick in & lose value on the decling bonds!!!!!!!!!!!

The simple answer to your question is NO!!!!!!!!

You're doing fine & in 10, 20, 30 years you'll be thrilled you were in a 401K.

Take a little time to learn.... your whole financial future depends on it..... and it's not hard.

Start by reading;

401k's For Dummy's

Mutual Funds For Dummy's

And..... learn "asset allocation" (should be part of the books above)..................................

Answer 2

10% down in one month. Well, it will be hard to suggest anything without knowing what you are holding.

It depends if the stocks you are holding are inherently good but down because of systemic risks and bear market and should eventually come back in a couple of years. Or if what you are holding are companies on the verge of callapse or with no future earning generation capacity.

In the first case, you should hold on to your investment. In the second case, you should cut your losses as soon as possible, and find new investment in either equity or bonds (i am not bullish on bonds either going forward)

Answer 3

You should have already had some of your 401k in bonds.  The rule of thumb is to have the same percentage as your age in bonds and fixed income investments.  Except for high yield, bonds havent done too bad lately. But its not what's happening now thats important.  A 401k is a long term investment.  It should be set up according to your risk tolerance for the long term.  As time goes by you can afford less risk, and less exposure to stocks.

Answer 4

Without knowing your age, goals and other investments you have and when you plan to retire, no one should be able to answer this properly for you.  Investing is looking at the whole picture, not just a snapshot of one or two months.  Assuming that you are young (because of the small 401k) you have time on your side.  Time IN the Market not Timing the market will always be in your best interest.  Invest and forget about it.  Do not try to micromanage every month or you will drive yourself crazy.  Just systematically place money in your 401k and reap the benefits when you retire.

Good luck.