The other day, I did what I normally do around the 1st of each month. With the click of a mouse, I updated my retirement account information in Quicken Deluxe. Unhappy with the account balance, I thought about an idea that only comes to mind when my balance is down from the previous month/s.
When the market value of your 401k retirement account is up, wouldn’t it be cool if you could a) “sell” some or all of your holdings, b) sweep those proceeds into a money market account, yet c) maintain the same allocation for future contribution dollars? Ironically, you can utilize this strategy for IRAs or taxable accounts, but not a 401k! To me, this a shame.
There are some who may read the above and believe I’m advocating we all turn into market timers. I’m not. Besides, market timing works only for a few experts, if for no other reason than the fact that by the time the “average investor” realizes the market is headed for a bull or bear market, we’ve missed the window of opportunity to take full advantage of said. I also know that the discipline of dollar-cost-averaging is one of the things that helps us avoid the human tendency to attempt to time the market.
However, this awareness doesn’t stop me from wishing the 401k market was structured differently. I wish I could lock in the gains in my retirement account and maintain my current investment strategy for future contributions. And I wish you could, too!
