Dollar value averaging (DVA) with a 401K?

[peace99]

I’ve been reading up on creating an investment portfolio and I like the idea of ‘Dollar value averaging’ across the portfolio as it forces you to sell high and buy low (that is my basic understanding).

The question I have is around the 401K: How do I include my 401K in DVA as the 401K contributions are taken out of my monthly pay (fixed dollar amount).

I assume with a HSA and IRA this is not a problem as I can decide when and how much to add to them.

Thanks

[shotgunwilly]

I do not believe there is a good way to do this in a company 401k.  Dollar Cost Averaging is the strategy in this case.

[DrF]

The easiest way I can come up with is to have 2 funds in your 401k. Put the bulk of your investment into the more volatile of the 2 funds (like a small or mid cap index) so that you can take advantage of market movement. Use the other fund to receive the monthly addition from your paycheck. Then, track only the 1st fund every quarter for your target increase (probably ~3%). Sell any to your cash/bond account from the 1st fund only, then transfer all of the money from your 2nd fund to your 1st fund. This makes it easy to calculate what your basis is each quarter. Don't worry about the returns you are getting on the 2nd fund.

Hope this helps.

DrFunk