Need a advice ppl, I started contributing to 401k since start of the last year and now I hear lots of news for recession (in coming year or so). I put 20K so far and it has grown to 24K in WFSPX (contributing ๐ฏ in there). Should I move my existing money and future contributions to Bond (BHYIX) Fund till market stabilizes (let say 2-3 years from now). I don't have immediate requirement of funds and they are marked for retirement only. I am 40 years old and planning to work till 65 years, appreciate your ideas. TC: 128k YOE: 14
You work at TD Ameritrade, ask your colleagues ๐
U need a good asset allocation based on ur risk appetite so that u dont fear recessions
So divide between bonds (total bond market) and stocks (total market)
Thanks for the suggestion :-)
Your risk profile is really high for 40. Just use wealthfronts questionnaire and it will set a recommended risk level for you. Go with that. Donโt do anything based on your belief of recession. Since you have a 25 year horizon, you might still have 2-3 recessions left to see during that time.
Thank you will check it now.
Oh I totally thought you were talking about wealthfront because the fund you mentioned looked like a wealthfront fund. Either way, still equivalent concept. You should be using one of those formulas in general to determine your stock bond mix. Go with like 110 - age which would be a 70/30 mix. Iโm choosing 110 instead of 100 because you plan to work until 65 so you have long horizon.
Market always recovers within a year or 2. Dont try to actively trade in your 401k unless you are very near retirement otherwise you will end up losing the dollar cost averaging benefit for your 401k
Gotcha
Recession will happen, but nobody knows when - If they say otherwise consider them a liar. I wouldn't change anything. Stay the course and consider buying more equities during a recession if you can stomach it. Good luck.
Bonds have rarely been as expensive as they are now. Hard to picture in the long term with the government deficit as it has been the last 20 years that they donโt rise. And youโll never time the market.
Don't move shit, just diversify
How, you mean divide monthly contributions to Stocks + Bonds?