Your Thoughts - 401k to Money Market. (401k is currently stagnant deposit wise)

[Lord Xar]

Hey All,

I moved jobs and my previous job was contributing to my 401k. Now, my new job does not contribute so I am NOT currently contributing this particular 401k. (the one in question). I've already lost a few thousand since the new year in it. And it is now just sitting there in Fidelity.
I am really thinking things are gonna go south.

So, instead of withdrawing the monies and taking the tax hit - should I just move the monies into a money market?

Your thoughts are appreciated.

Edit: Thinking of moving it here, which didn't show much loss at all during last recession
Managed Income Portfolio II Class 1
Bond/Managed Income Stable Value
(04/20/1993 7 day yield as of 12/31/2015 1.39% )

 

[Brian4Liberty]

One of the reasons for the last panic that resulted in TARP was that a money market fund "busted the buck". In other words, your money market account can start losing money. IIRC, they changed the law to make it more acceptable for a money market account to bust the buck. Insurance on a mm account does not cover NAV falling below a dollar.

 

[devil21]

Hey All,

I moved jobs and my previous job was contributing to my 401k. Now, my new job does not contribute so I am NOT currently contributing this particular 401k. (the one in question). I've already lost a few thousand since the new year in it. And it is now just sitting there in Fidelity.
I am really thinking things are gonna go south.

So, instead of withdrawing the monies and taking the tax hit - should I just move the monies into a money market?

Your thoughts are appreciated.

Edit: Thinking of moving it here, which didn't show much loss at all during last recession
Managed Income Portfolio II Class 1
Bond/Managed Income Stable Value
(04/20/1993 7 day yield as of 12/31/2015 1.39% )

Moving to a bond portfolio and/or cash positions are relatively safe in bear markets, however I'm convinced this isn't simply a cyclical stock downturn but rather a large scale reset underway and most everything paper/dollar denominated is being systematically crashed. Nothing is truly safe while this unfolds except hard assets.

 

[Zippyjuan]

You certainly don't want to cash it out- you get hit with a ten percent penalty plus having to pay taxes on it. http://news.walmart.com/news-archiv...inues-sharpened-focus-on-portfolio-management

In addition to federal and state income tax, investors younger than 59½ who cash out have to pay a 10% early withdrawal penalty. The potential result: Cashing out $50,000 in 401(k) savings may leave just $35,000 in cash after 20% withholding and a 10% early withdrawal penalty.

Another investment would have to gain about 50% just to get you back up to your original 401k balance.

 

[Lord Xar]

so, in other words --- keep it where it is and take the huge loss when it comes?

somehow that doesn't seem appropriate

 

[DamianTV]

(Image Credit: Zero Hedge)

But but everything is awesome and you should keep all your money in the stock market so you can retire!

 

[Lord Xar]

Amazing! I just looked now cause I'm done -- this is gonna go down in flames.. and that investment is no longer offered:
Managed Income Portfolio II Class 1

Why would my 401k all of sudden not have this, when it did some days ago? weird!

 

[devil21]

Amazing! I just looked now cause I'm done -- this is gonna go down in flames.. and that investment is no longer offered:
Managed Income Portfolio II Class 1

Why would my 401k all of sudden not have this, when it did some days ago? weird!

Holder, meet bag.

(I hope not for real but fund offerings change. Are there any other bond funds available instead?)

 

[Lord Xar]

Holder, meet bag.

(I hope not for real but fund offerings change. Are there any other bond funds available instead?)

sorta - I was able to get into a stable value option.. guaranteed - but very very low interest yields. But, I'm doing nothing but losing thousads right now... last time I let it "ride" --- lost nearly 40%... not this time.

 

[oyarde]

I cashed all of mine in but one , pretty soon I will be able to roll it and smoke it .

 

[cocrehamster]

Market timing is very difficult to do successfully; good luck!

 

[Ronin Truth]

It's tougher to lose what's NOT on the table. (Unless, that is, the government decides to confiscate it.)

 

[John X]

so, in other words --- keep it where it is and take the huge loss when it comes?

somehow that doesn't seem appropriate

.

All the evidence shows that that is the best strategy. People who never log into their accounts beat people who try to time the market. If you sell now good luck figuring out when to get back in, most people cost themselves money trying.

 

[devil21]

.

All the evidence shows that that is the best strategy. People who never log into their accounts beat people who try to time the market. If you sell now good luck figuring out when to get back in, most people cost themselves money trying.

That assumes the "get back in" point would be anywhere in the foreseeable future. Look for the hyper-inflationary QE money drop as the "get-back-in" point if playing with imaginary money in imaginary accounts is your thing.

 

[otherone]

so, in other words --- keep it where it is and take the huge loss when it comes?

somehow that doesn't seem appropriate

How is the Real Estate market in LA?

 

[Zippyjuan]

That assumes the "get back in" point would be anywhere in the foreseeable future. Look for the hyper-inflationary QE money drop as the "get-back-in" point if playing with imaginary money in imaginary accounts is your thing.

People who try to time the market usually make the wrong choices. They get out when dips are near the bottom and they are the most scared. They they wait too long to get back in- after many of the gains have taken place- selling their stocks near the bottom and buying them back at a much higher price. Declines tend to be much less frequent and not as deep as the rebounds which follow so it is best to wait it out. Unless it is money you will be needing in the next few years and cannot afford to wait out the market.

 

[Zippyjuan]

How is the Real Estate market in LA?

My real estate plan was buying my own home and having it paid for (which I have done). That lowered the amount of money I need to live on in retirement. I took money I was spending on paying rent anyways and used it to reduce my future expenses (as well as gaining a valuable asset I can then resell as needed and get more money). Lowering your expenses has the same net impact on your budget as getting a pay raise.

 

[John X]

That assumes the "get back in" point would be anywhere in the foreseeable future. Look for the hyper-inflationary QE money drop as the "get-back-in" point if playing with imaginary money in imaginary accounts is your thing.

Like that "hyper inflation" we had after the last round of QE with lower than average CPI and one of the greatest commodity crashes in recent history?

 

[otherone]

My real estate plan was buying my own home and having it paid for (which I have done). That lowered the amount of money I need to live on in retirement. I took money I was spending on paying rent anyways and used it to reduce my future expenses (as well as gaining a valuable asset I can then resell as needed and get more money). Lowering your expenses has the same net impact on your budget as getting a pay raise.

Where I live, banks are carefully feeding in foreclosures; I'm in the process of purchasing a HUD house at half market price by cashing out my SEP IRA.
There are opportunities everywhere, staying liquid seems to be the way to go.

 

[Lord Xar]

How is the Real Estate market in LA?

So far out of my price range, that it might as well be on the moon .... unless its wayyyy inland.. but I think right now, everywhere is too high. Was thinking vegas, but from the people I've spoken too also agree things are too high, and not realistic. -- so I'll wait.