Portfolio balancing question

Froogle · Post by **Froogle** » Tue Mar 18, 2008 8:51 pm

I usually balance my 401K plan in March. With current market turmoil, what is advisable - balance in March or wait couple more months. At present my portfolio is showing (-ve)3.95%
Please advise.

Bobus · Post by **Bobus** » Tue Mar 18, 2008 8:57 pm

Froogle;89408I usually balance my 401K plan in March. With current market turmoil, what is advisable - balance in March or wait couple more months. At present my portfolio is showing (-ve)3.95%
Please advise.[/quote]

Basically you are asking whether the market will move up or down over the next 2 months. All I know is that like an elevator it will go up or down. :)

If one is moving money from fixed income into equity, whether it is the ides of March or not, doing so gradually lowers risk and lowers expected return.

Froogle · Post by **Froogle** » Tue Mar 18, 2008 9:05 pm

Bobus;89411If one is moving money from fixed income into equity

Actually I am thinking reverse, moving from aggressive and icome to fixed. In other words to reduce risk factor as approching R2I. Sorry I forgot to mention it. If I balance it today I will loose gains earlier from Income and Aggressive funds +(plus) loss of (-ve)3.95%. On the contrarary if there is possibility of any recovery make sense to wait a bit.
Thanks Bobus.. Please let me know if I am thinking too much unnecessarily.

Bobus · Post by **Bobus** » Tue Mar 18, 2008 9:20 pm

Froogle;89414Actually I am thinking reverse, moving from aggressive and icome to fixed. In other words to reduce risk factor as approching R2I. Sorry I forgot to mention it. If I balance it today I will loose gains earlier from Income and Aggressive funds +(plus) loss of (-ve)3.95%. On the contrarary if there is possibility of any recovery make sense to wait a bit.
Thanks Bobus.. Please let me know if I am thinking too much unnecessarily.[/quote]

Even if moving from equity to fixed income, doing so gradually lowers risk. I dont know which way the market will move.

That said, assuming you are on a preset program of lowering equity exposure in AAP gradually, the recent downturn would likely have taken care of it unless the equity exposure reduction you seek is huge. If it is the downturn that is prompting you to lower equity exposure, it suggests that risk tolerance was not assessed appropriately in the beginning.