Comments on: How should I invest my 401K if I intend to leave my current company after 1 year? http://www.secretfinance.com/blog/how-should-i-invest-my-401k-if-i-intend-to-leave-my-current-company-after-1-year/ Thu, 17 May 2012 20:31:41 +0000 http://wordpress.org/?v=2.7 hourly 1 By: eternal student http://www.secretfinance.com/blog/how-should-i-invest-my-401k-if-i-intend-to-leave-my-current-company-after-1-year/comment-page-1/#comment-603 eternal student Thu, 29 Jan 2009 17:47:31 +0000 http://www.secretfinance.com/blog/how-should-i-invest-my-401k-if-i-intend-to-leave-my-current-company-after-1-year/#comment-603 Assuming your funds are currently invested in stocks: The US equity market is down some 40% from the peak it reached in 2006. We don't how much of these losses will be recovered by the time you move. At rollover, all your positions will be sold and your paper losses will become realized losses. Therefore, unless the markets have recovered significantly within the next year, you are better off leaving it alone in your current employer plan. You can always roll it over at a later time. Suppose you have already moved all your 401K investments to cash (i.e money market funds): You can rollover your cash to your new 401K plan or IRA as soon as you are able to. From that point you could move the funds to the appropriate investment vehicles depending on your age and risk tolerance. Regarding your question on staying with the same fund for 5 or more years, the short answer is not necessarily. If you are moving sideways within the same asset class. i.e. from a large cap equity index fund to another large cap equity index fund, you will reap the same benefits. So, technically speaking, you can make this sideways move anytime. But given the volatility of the markets, it is better to leave your equity investments in your old 401K until it is a suitable time to do some rebalancing. As for your question regarding reaping the benefits from the stock market, the best way to do that is by choosing the broadest possible index fund, and investing consistently, over a long time horizon. Obviously investment decisions need more careful due-diligence. You should consult a financial planning adviser before making any decisions with your hard earned money. Assuming your funds are currently invested in stocks: The US equity market is down some 40% from the peak it reached in 2006. We don’t how much of these losses will be recovered by the time you move. At rollover, all your positions will be sold and your paper losses will become realized losses. Therefore, unless the markets have recovered significantly within the next year, you are better off leaving it alone in your current employer plan. You can always roll it over at a later time.

Suppose you have already moved all your 401K investments to cash (i.e money market funds): You can rollover your cash to your new 401K plan or IRA as soon as you are able to. From that point you could move the funds to the appropriate investment vehicles depending on your age and risk tolerance.

Regarding your question on staying with the same fund for 5 or more years, the short answer is not necessarily. If you are moving sideways within the same asset class. i.e. from a large cap equity index fund to another large cap equity index fund, you will reap the same benefits. So, technically speaking, you can make this sideways move anytime. But given the volatility of the markets, it is better to leave your equity investments in your old 401K until it is a suitable time to do some rebalancing.

As for your question regarding reaping the benefits from the stock market, the best way to do that is by choosing the broadest possible index fund, and investing consistently, over a long time horizon. Obviously investment decisions need more careful due-diligence. You should consult a financial planning adviser before making any decisions with your hard earned money.

]]> By: src50 http://www.secretfinance.com/blog/how-should-i-invest-my-401k-if-i-intend-to-leave-my-current-company-after-1-year/comment-page-1/#comment-602 src50 Mon, 26 Jan 2009 15:34:45 +0000 http://www.secretfinance.com/blog/how-should-i-invest-my-401k-if-i-intend-to-leave-my-current-company-after-1-year/#comment-602 If you're likely to roll it over in less than five years, I'd leave it in a money market fund. If you’re likely to roll it over in less than five years, I’d leave it in a money market fund.

]]> By: JohnGalt http://www.secretfinance.com/blog/how-should-i-invest-my-401k-if-i-intend-to-leave-my-current-company-after-1-year/comment-page-1/#comment-601 JohnGalt Sun, 25 Jan 2009 06:11:47 +0000 http://www.secretfinance.com/blog/how-should-i-invest-my-401k-if-i-intend-to-leave-my-current-company-after-1-year/#comment-601 In a year, market could be up or down. If you are sure you are leaving, just put it in a money market. In a year, market could be up or down. If you are sure you are leaving, just put it in a money market.

]]> By: randall_senn http://www.secretfinance.com/blog/how-should-i-invest-my-401k-if-i-intend-to-leave-my-current-company-after-1-year/comment-page-1/#comment-600 randall_senn Fri, 23 Jan 2009 13:33:07 +0000 http://www.secretfinance.com/blog/how-should-i-invest-my-401k-if-i-intend-to-leave-my-current-company-after-1-year/#comment-600 I'd go with an S&P 500 index fund. Even if you can't keep it at your old company, the market is likely to recover some before the year is out. We're near the bottom. I’d go with an S&P 500 index fund.

Even if you can’t keep it at your old company, the market is likely to recover some before the year is out. We’re near the bottom.

]]> By: Derek http://www.secretfinance.com/blog/how-should-i-invest-my-401k-if-i-intend-to-leave-my-current-company-after-1-year/comment-page-1/#comment-599 Derek Wed, 21 Jan 2009 03:54:56 +0000 http://www.secretfinance.com/blog/how-should-i-invest-my-401k-if-i-intend-to-leave-my-current-company-after-1-year/#comment-599 You can't move it into another 401 (k), but you can move it into a rollover IRA. I'd stay heavy in stocks especially if you're under age 50. You can’t move it into another 401 (k), but you can move it into a rollover IRA.

I’d stay heavy in stocks especially if you’re under age 50.

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