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401k contibution goes to which account?
Old 09-11-2007, 07:34 PM   #1
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401k contibution goes to which account?

I have always kept it simple and had my 401k payroll contribution allocated directly to the funds I selected in Vanguard. I believe its called dollar cost averaging, didn't matter whether the market was up or down it automatically went into the funds I had selected. Is this how the majority of the folks on this forum do it? I have been wondering if it makes sense to have all the new contributions deposited in say a MM fund then in market pullbacks allocate the money to the different funds? Thanks.
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Old 09-11-2007, 08:15 PM   #2
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I've never parked my 401k money in the money market or equivalent, but have always invested directly in the funds I want. Only in the last year have I moved significant assets around in the 401k to reflect my overall desired asset allocation, so that's an improvement for me I think.
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Old 09-11-2007, 09:30 PM   #3
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murg - what you are doing now, automatic contributions to your selected funds, is how many people manage their contributions to a 401k or other retirement or investment account. I would recommend you continue to do that while reading up on investing before changing, if ever, to a market timing strategy which is what parking your money in MM fund and then buying in during pullbacks would be. It seems intuitively obvious this would be a "winning" strategy but if it was everyone would be doing it. Become informed and evaluate the risks before changing what you are doing now. I would recommend going to the bogleheads.org site and find one or more of the general investing books listed in the "books of interest" page at your local library to get started.

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Old 09-11-2007, 09:36 PM   #4
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Quote:
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I have been wondering if it makes sense to have all the new contributions deposited in say a MM fund then in market pullbacks allocate the money to the different funds? Thanks.
I guess if you think you can time the "market pullbacks" correctly then why not, but you might miss big market advances while your money is sitting in the MM fund. Usually in a 401k you can only shift money at the end of each trading day. I prefer to not stress over it and just DCA every 2 weeks (paid bi-weekly). What is your definition of a market pullback, and what would be your trigger for moving $$$ from MM to other (presumably stock?) funds?
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Old 09-11-2007, 11:57 PM   #5
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When I was actively putting $$ into my IRA (and 401ks when I worked where they had them), I did the same--equal amounts to all funds. When I contribute again, it will be the same way. (Meantime, I will pay off my debt load.)
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Old 09-12-2007, 06:56 AM   #6
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Quote:
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I have always kept it simple and had my 401k payroll contribution allocated directly to the funds I selected in Vanguard. I believe its called dollar cost averaging, didn't matter whether the market was up or down it automatically went into the funds I had selected. Is this how the majority of the folks on this forum do it? I have been wondering if it makes sense to have all the new contributions deposited in say a MM fund then in market pullbacks allocate the money to the different funds? Thanks.
In answer to your question, yes, I dollar cost average. Then, if my percentages wander pretty far off from what they are intended to be, I re-balance. I also rebalance if it has been over a year, just for GP.
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Old 09-12-2007, 07:30 AM   #7
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Yes, I DCA with each paycheck.
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Old 09-12-2007, 09:15 AM   #8
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murg, I think you're doing it just right. Like me

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