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What would you do in regards to 401k investment strategy based on my situation?
Posted on 12/17/22 at 8:04 am
Posted on 12/17/22 at 8:04 am
So I have worked for my company for 25 years. Have been invested in 401k from day one. Always heard everyone around me preach diversifying. Have had my money split about 60% mutual fund, 20% bond fund, 20% my companies stock. Also every year on top of company match would also receive profit sharing in form of company stock. Up until beginning of the year have averaged about 10% gains over the course of my career.
About 6 months ago I was -21% YTD. Our company stock had been at a 52 week high (also record high) of $453a share but noticed on that particular day had dipped to $385 share. I moved all my money 100% to company stock. For the last week or so it has been bouncing around $465-475. I am actually back to showing a small percentage of growth YTD. Should I let it ride or re diversify my portfolio.
Makes me nervous with it all being on one company. Although I will say when I started 25 years ago our stock price was $35 share and now it is $470 ish share. Had I put it all in my company stock from get go and let it ride over the 25 years, I would have had a hell of a lot more money than I do now.
About 6 months ago I was -21% YTD. Our company stock had been at a 52 week high (also record high) of $453a share but noticed on that particular day had dipped to $385 share. I moved all my money 100% to company stock. For the last week or so it has been bouncing around $465-475. I am actually back to showing a small percentage of growth YTD. Should I let it ride or re diversify my portfolio.
Makes me nervous with it all being on one company. Although I will say when I started 25 years ago our stock price was $35 share and now it is $470 ish share. Had I put it all in my company stock from get go and let it ride over the 25 years, I would have had a hell of a lot more money than I do now.
This post was edited on 12/17/22 at 8:08 am
12
Posted on 12/17/22 at 8:09 am to Kingshakabooboo
Re diversify is the answer. Putting all your eggs in one basket is just extremely too risky when you are talking about your retirement.
Don't let short term greed derail all the great work saving you have done up to this point
Don't let short term greed derail all the great work saving you have done up to this point
Posted on 12/17/22 at 8:10 am to Kingshakabooboo
pick the lowest cost SP500 fund available to you and move most of your money there.
There is no need for bonds right now unless they are ultra short - maybe have 5% or so in company stock.
Depending on age, look at putting some of your recurring deposits into money market accounts and catch the bump in rates.
There is no need for bonds right now unless they are ultra short - maybe have 5% or so in company stock.
Depending on age, look at putting some of your recurring deposits into money market accounts and catch the bump in rates.
Posted on 12/17/22 at 9:34 am to Kingshakabooboo
Other than knowing that you’ve been with your company for 25 years, we don’t know anything else about your situation (financially or otherwise). But no matter what, having all of your retirement funds in one stock (especially the company you work for) is a tremendous gamble. Just because it’s worked out (so far) doesn’t make it wise… some gambles pay off. Let’s say something unexpected happens and your company hits a rough patch. The company stock takes a tumble and at the same time, you lose your job. Doesn’t matter how remote the possibility is, it’s still a possibility. I’d diversify and mitigate that risk.
Good luck.
Good luck.
Posted on 12/17/22 at 9:38 am to Kingshakabooboo
3-5% max of total portfolio is any individual stock is the guideline I follow. Rebalance/diversify a little more (20% company stock to 5% max).
Presume company stock is part of your 401k per title so tax sheltered makes following irrelevant but…if not tax sheltered, Tax loss harvesting (selling company stock shares that lost first) to get tax benefit in so doing. Need to move before year end.
Good luck.
Presume company stock is part of your 401k per title so tax sheltered makes following irrelevant but…if not tax sheltered, Tax loss harvesting (selling company stock shares that lost first) to get tax benefit in so doing. Need to move before year end.
Good luck.
Posted on 12/17/22 at 9:55 am to Kingshakabooboo
I’ve seen where guys I worked with put all their eggs in one basket. They were really risky and made out big. I would never do it but realize that a lot of rich people got that way by taking risks. I would have a financial advisor available to me after I’ve been working for 25 years. Could be quite advantageous and give you some confidence in knowing you’re heading in the right direction. But then there are no guarantees.
Posted on 12/17/22 at 1:48 pm to Kingshakabooboo
Terribly risky allocation. Not only 100% employers stock your job is also with them. So if company falters you're potentially f'd doubly. Your nervousness is both your intuition saying its too risky and a signal you dont have the constitution not to buy/sell at wrong times.
Only way this theoretically makes sense is if you have some keen insight into your company stock performance and can extremely confidently know when to get in/out. The fact you didnt see the previous dip coming tells you you really have no idea how it will be priced by the market. You got lucky once calling a low to reallocate. Now derisk by diversifying as your gut and knowledge are telling you to.
Only way this theoretically makes sense is if you have some keen insight into your company stock performance and can extremely confidently know when to get in/out. The fact you didnt see the previous dip coming tells you you really have no idea how it will be priced by the market. You got lucky once calling a low to reallocate. Now derisk by diversifying as your gut and knowledge are telling you to.
Posted on 12/17/22 at 2:13 pm to Kingshakabooboo
Post your company's ticker and I can tell you if you should hold
Posted on 12/18/22 at 6:15 am to Kingshakabooboo
Buy some put option in the company stock.
Seriously, all in one stock is extreme.
You job and your retirement funds all go away IF that stock evaporates.
Seriously, all in one stock is extreme.
You job and your retirement funds all go away IF that stock evaporates.
Posted on 12/18/22 at 8:48 am to Kingshakabooboo
I can't imagine being 100% invested in a company that I have zero control over, no matter how tempting the numbers might look.
Posted on 12/18/22 at 9:01 am to Kingshakabooboo
You've been working 25 years, so I assume you have at least 20 more to go.
STOP looking at your 401K statements and let it ride, over a 20 year period it will outperform any other investment
STOP looking at your 401K statements and let it ride, over a 20 year period it will outperform any other investment
Posted on 12/19/22 at 12:28 pm to Kingshakabooboo
Please diversify ASAP. If you really love your company and believe in it, then keep MAYBE keep 10%
This post was edited on 12/19/22 at 9:14 pm
Posted on 12/19/22 at 12:48 pm to Kingshakabooboo
Are you a gambling addict? Because only gambling addicts would fail to cash in their earnings.
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