Good News, we sold my wife's 401K on Monday before the big drop

[Pointby2]

We are transferring the funds to a IRA rollover account to be consolidated with my other funds at E*Trade. So the "bad" news, is that we now have to figure out how to reinvest the funds and if we should dollar cost average or just drop them in.
Her Employer Sponsored Plan was:

• 40% Large Cap Equity
• 25% Blackrock Money Market
• 25% My Retirement 2025
• 10% JP Morgan Short Term Bond

My wife wants to remain somewhat conservative, so at E*Trade I'm looking at:

• 45% VOO - SP500 Fund
• 30% CDs/TIPS/Bonds
• 15% VPU - Utilities ETF
• and the rest not so sure, maybe MAIN and BX for growth and income?

Is there something I'm missing?

Thanks!

[gauss]

Regarding the timing...

Psychologically speaking:

1) It is easy to sell.

2) It is slightly harder to buy back in at a lower price when the market is dropping.

3) Is is even harder still to buy back into a rising market for a price that is higher than when you sold. Things can potentially get away from you in this scenario.

-gauss

[Al18]

FYI it’s not necessary to sell any funds when converting from a 401k to an IRA in most cases. You will likely need to convert the stable value fund to a fixed income equivalent.

[jldavid47]

It doesn't look to me like you've reduced your risk at all. You've likely increased your income but you still have a lot of exposure to the downside in stocks and bonds. Most here probably consider what you are looking at as "somewhat conservative" but I wouldn't agree with that assessment in the context of the current environment.

[single2019]

Quote:

Originally Posted by Al18 FYI it’s not necessary to sell any funds when converting from a 401k to an IRA in most cases. You will likely need to convert the stable value fund to a fixed income equivalent.

Many 401Ks have proprietary funds that are not transferable

[Pointby2]

Quote:

Originally Posted by jldavid47 It doesn't look to me like you've reduced your risk at all. You've likely increased your income but you still have a lot of exposure to the downside in stocks and bonds. Most here probably consider what you are looking at as "somewhat conservative" but I wouldn't agree with that assessment in the context of the current environment.

Her money is still about 95% in cash as the market falls. Bought some VOO, VPU and MAIN today, along with TIPS and CDs. Our objective isn't to reduce risk further, but to maintain the same level of risk as she had in her Merrill Lynch 401K.

[jldavid47]

Quote:

Originally Posted by Pointby2 Her money is still about 95% in cash as the market falls. Bought some VOO, VPU and MAIN today, along with TIPS and CDs. Our objective isn't to reduce risk further, but to maintain the same level of risk as she had in her Merrill Lynch 401K.

Ok. Thanks. I misunderstood your original post.

[target2019]

Quote:

Originally Posted by Pointby2 Her money is still about 95% in cash as the market falls. Bought some VOO, VPU and MAIN today, along with TIPS and CDs. Our objective isn't to reduce risk further, but to maintain the same level of risk as she had in her Merrill Lynch 401K.

You're back on the road!

I moved my two 401(k) accounts to Schwab. It was not possible to transfer in kind. That may be what you found, or the expense ratios were crazy high. Whatever the reason(s) you're gold now.

I continue to buy ETFs after investing 1/3 right away into the very high prices. Then as prices dropped I invested another 1/3. By the end of 2023 I should be 100% invested according to planned asset allocation.

Have you considered BX paired with MAIN?

NM. I just reread your 1st post.

[RetireBy90]

I would echo part of gauss post, finding the "bottom" is hard and I can't do it at all. Given that I would plan to reinvest over a period of say 12 months and put 1/12th into desired allocation each month. We could see another 20% decline in equities, most certainly will see further decline in the value of existing bonds as rates rise. However when is not in my bag of knowledge, so going in over a period of time, anywhere from next 6 months to next 2 years would keep some safe from further declines this year but have some at risk to cat the next up cycle.

Just one person's view

[Pointby2]

We've been investing her rollover 401K. I've always managed my own 401K and Roth accounts. I never realized how terrifying it is to be buying $100,000 lots of CD's and Treasuries at a time!


So far, we have $65K of VOO, 22K of VPU and small stakes in BX and MAIN. The rest is in CD's, Treasuries and plain cash. My plan is to scoop up more VOO if the market drops another 5%. Otherwise I'll invest 10% a month until we're fully invested.