3mo ago

as a financial illiterate stuck with a 401k, what do i do?

as many americans forced to run with a 401k because we dont know any better and its the 'path of least resistance' to a retirement account... what do we do in the face of a dying democracy and economy?

id love to move it to some 'foreign' investments, but is that even a possible option? do i just hope and wait for stability to return at some point in the future or is it hookers and blow time?

28 comments

The whole point of having a 401k is to keep plugging away at it, slowly but surely. That way, the ups and downs affect you less, because of dollar cost averaging. If you're a ways off from retirement, your dollars now buy more shares than they did last year this time.
The expectation is that the market will rebound, and then you will gain quite a bit on what you have invested today.
On the other hand, if shit hits the fan, that money wasn't going to do anything for you anyway.
Nothing. Wait it out. Don’t even look at your balance.
- this is kinda where im at. it just feels gross to be 'investing' in america at the moment.
  
  Well you have a choice. Either diversified portfolio and that includes international. Or some tilt to it that reflects your values.
  Keep in mind if you had a pension or an annuity they would be doing the same thing so both have portfolios. Just one is more direct and you have more control.
  
  It’s too late to sell now. If you want to move your investments elsewhere, you’ll need to wait until they climb back to all-time highs - which could take at least a year or so. That said, not investing in the U.S. at all would be considered a poor financial decision by most informed investors. You’d be leaving a lot of money on the table, and honestly, kidding yourself too if you think non-U.S. mega corporations are somehow more virtuous.
It seems you’re asking a few questions.
One, a 401k is not your only route for investment. Depending on your income you can also differ to a ROTH 401k with tax benefits.
You should start your IRA/ROTH IRA if you can invest more than what’s in your 401k which is limited to work.
I would say if you have cash now is a good time to invest with recent discounts but following Jack Bogle’s ideology, time in the market beats trying to time the market every time. Vanguard has two index funds that are commonly recommended for this strategy, VT and VTI. I forget but I think the ~~latter~~ former is the international fund which allows you to have a balance between American investments and world wide investments.
The economy will come back in country and out. If it doesn’t I think we will have bigger problems than money.
Bogleheads site where you can easily find the forum and wiki.
Here’s a link which has a lot of helpful topics one including preparing for retirement.
Edit info:
I was wrong, VT is total world https://finance.yahoo.com/quote/VT?p=VT
VTI is US https://finance.yahoo.com/quote/VTI?p=VTI
- hmmmmmmmmmm i do have a vangaurd account for nonsense/vanity stocks... ill check out VTI. thanks!
  ive got ~10 years i can wait for it to come back around.. .thats only 2.5 presidents!
  
  I think that philosophy actually starts to shift their portfolio more to bonds at some point for stability. Maybe read into it
  
  You don’t have to have an account with them to access their index funds :) but that certainly works!
  I was wrong, VT is total world https://finance.yahoo.com/quote/VT?p=VT
  VTI is US https://finance.yahoo.com/quote/VTI?p=VTI
All about diversification. If your in one of the target date funds, you should already have 30 or 40% foreign stock and maybe 60/40 stock to bond ratio depending on your age. Look at your asset allocation.
- great info, thanks! i didnt know that funds could be made up of foreign stocks.
  
  You could go to Vanguards website and look at their funds just as an example. They have funds that are totally international for example. If you look at target date funds theirs are maybe 40% international. Me personally I prefer the 30 to 35% range simply because international has not had the returns of US though hey maybe finally international will out perform US. Who knows.
When the stock market is having fire sale is not the time to ask questions, it is time to buy. Trump is near 80 - he won't be alive in a few years. He stastically has a 25% chance of not even finishing his term. Power will shift and shift again ever few years. those who stick to a good plan do fine.
Even in the worst case you are unlikely to find the better answer ahead of time. Just enjoy the sale and forget about daily movement.
The first rule about asking for financial advice on the internet is: dont follow financial advice on the internet.
- There is a lot of good advice on the internet. Boggleheads for one.
- sure, but it feels like those are mutually exclusive
  
  Yeah I had debated committing to the bit and adding a
  Disclaimer: This is not financial advice
  to the end
It depends on things like how flexible your investment options are with your 401k program, if yours is through work and your employer also contributes a percentage, and the big one, how long have you been investing and how long before you need the money.
The two best ways to protect yourself from unstable times is through diversification and long range investing. Try to get fast growth in these conditions you're likely to lose. It might be an idea to actually pay someone to help you look at your financial options, although right now even they might be a bit uncertain as nothing happening makes any sense.
or is it hookers and blow time?
Are you honestly asking for advice with this left field comment?
- ha, its an offhand way of saying 'remove investments, have fun for the short time the world will exist'
  i take it youre not a futurama fan
  
  'remove investments, have fun for the short time the world will exist'
  I don't see this is being a good financial choice unless you honestly believe that nuclear war is about to go down. If the measles gets as serious as covid, it still wouldn't be a good idea.
  
  Oh! I love futurama but did not get this reference :/

28 comments