22 April 2009

What to Do About Your 401K

Today, MSNBC.com posted a pertinent item from the Associated Press suggesting steps one should take before making changes in their 401K.

I, along with many others, have reached the point where I am reluctant to even open my statements and am in quandary as to what steps would make sense. Swallow my losses and park the money in "safe" bonds, or try to ride it out and hope that within the twelve months, before I'm compelled to start a draw-down, that sufficient recovery will have occurred to allow me to recoup some of the losses? The proverbial horns of a dilemma!

The article, and links to tools, was most welcome and I'll include those links for you in this post.

The basics are these:

  • Get benchmarks. Your plan should provide you a benchmark index.
  • Use the correct time period. Do not compare first quarter 2009 to fourth quarter 2008.
  • Use the internet to find tools to help you in your planning.
Benchmarking is the key, because it provides you lessons about funds and how asset allocation can make a big difference.

Link to entire MSNBC.com article

Tools and sites with more assistance:


Google Finance


In conclusion, you will help yourself if you can get your stocks and bonds inside funds that look somewhat like a model portfolio.

And remember, do not panic, do not be hasty. If you're five years or so away from compulsory draw-down, you'll probably recover. But, if you're a year or two away, you may need to figure out how best to reallocate your assets. But, be smart, and do a bit of research and planning, lest you make a tough situation even worse.

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