I am retiring at end of March, 2020. Fund choices in workplace 401 are few. I am slowly exiting existing positions in order to preserve principal. Once I retire I will move monies somewhere where my options are more suitable for a someone in retirement. My question is, Which funds of my 401 choices would you leave money in the next 6 months.
AMRMX, VFINX, VIGRX, OAKBX, OAKIX, FSCCX, VMVAX, PTTRX, ODMAX and a preservation trust fund.
Comments
Derf
Just looking for an opinion on funds for the short term. Once I retire the money will not be at my workplace anymore. After I rollover I can pick which funds I want.
Consequently I would lighten up on the developing markets and stocks
or, indeed, if there is a ~2% mmf, put all in that
I mean, you already have something of a conservative bent (principal preservation)
Derf
However, some say, you really don't need foreign holdings since about 40% of the revenue found in the S&P 500 Index now comes form abroad. Perhaps so.
I sincerely wish you the very best in the years ahead.
Skeet
Now say you started with $6K in fund B, and because of market declines it's worth $5K. "Typically I would hold till things came back up."
What's the difference? Whether you have $5K in cash or $5K in fund B, you've got $5K to invest - either put it/leave it in fund B, or invest it/move it to fund A. Many people have a mindset that they don't want to "lock in" a loss. But that $1K loss above is a sunk cost. It's not a question of "recouping" the loss, but where that current $5K would be put to best use.
I agree with Skeet that you would be well off thinking about your long term asset allocation, setting up your portfolio that way, and when you roll over your account, to maintain your target allocation. Though you might use different and possibly better funds.
The question I asked was:
''Which funds of my 401 choices would you leave money in the next 6 months.''
For less risk, I would just keep OAKBX and get rid of the other funds. Not sure what a preservation fund is, but if it is similar to a GIC I would split between that and the balanced fund OAKBX at whatever percentages you're comfortable with.
Good luck.
But the specific funds you have available will change in six months, when you roll over your 401k. So you're asking about funds to use now for the next six months given your target allocation.
(If it helps you feel better, you might check to see whether your plan allows in-service distributions after age 59½, assuming you're that old. Then you could just move the money now; end of problem.)
Frankly it won't matter which 401k funds you pick. They are all respectable.
Whether you get your chosen large cap domestic equity exposure by using VFINX or a combo of AMRMX and VIGRX won't make a big difference. Whether you take one of these options and add PTTRX for your bond exposure, or use OAKBX for both stocks and bonds won't make a big difference either.
Building on @MikeM's comment - if you have a stable value fund that is paying as much as an intermediate term bond fund, that might actually be a better choice than PTTRX or OAKBX for bond exposure. Long term (the past year was an anomaly for bonds) that could give you similar returns with less volatility. You could roll over your other assets while leaving money in the stable value fund (if that's what you've got) when you leave.
You will surely be following Buffett's advice
Rule 1 Don't lose money
Rule 2 Don't forget rule 1
remember that even when conservative your retirement account should provide a real return (i.e beat inflation)
I think my suggestion will meet that goal and I hope your desired future investments will do that.