401k Tip- Changing Your Allocation

The 401k plan has been widely criticized for its comparison to defined benefit pension plans of old.

Contrary to popular belief, the 401k is not an all weather "set and forget" investment. It is dangerous to just set an allocation at 22-years old and cash out at 65.

The mantra all investors say is to "buy low and sell high". I highly recommend that you review all your fund prospectus and also monitor market conditions.

Averaging your costs up and down makes sense when recovering from to entering into a bear market. This is how fortunes are made. However, we are in a boosted bull market currently that will be topping out. Trillions of central bank dollars have inflated both the stock and bond markets, and I cannot recommend investing heavily into stocks now.

I have sold for profit in my 401k,and am adding cash. Simply put, mindlessly investing in toppy index funds now is not smart. When the correction comes, I will deploy capital into some risky funds and average my cost down.

Sources:

https://www.nasdaq.com/articles/4-401k-mistakes-that-will-derail-your-retirement-2019-12-04

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