Author Topic: Want to change my 401k AA. Am I timing the market?  (Read 1415 times)


  • 5 O'Clock Shadow
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Want to change my 401k AA. Am I timing the market?
« on: June 27, 2016, 12:27:00 PM »
My 401k is currently invested in a predefined 'aggressive' portfolio option with a 95/5 stocks/bonds split. I've been wanting to bring it down to the next portfolio tier which is 75/25. I've been hoping that I could make the change at a time when stocks are up, and I was getting ready to move on it and then the recent drop happened.

Make the switch or hold for a while? Am I timing the market (which I know I should not try to do)? Last I checked before the latest dip, my account was in the neighborhood of 230k.



  • Handlebar Stache
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Re: Want to change my 401k AA. Am I timing the market?
« Reply #1 on: June 27, 2016, 12:36:10 PM »
One way to re-balance your current AA is to allocated your ongoing contributions to meet your target allocation.  So if you want to bump up bonds, then you only contribute to bonds until you meet your target allocation.  If its going to take you a while, then I would recommend you only re-balance once a year at a specific time of the year to prevent you from timing the market.

For me I was falling behind on my bond allocation last year by about 5% so instead of moving funds out of stocks to bonds outside of my re-balancing window I changed my 401k contributions to put everything into bonds.  I won't hit my target allocation by next December but i'll be close and I will re-balance again to get back to my target allocation.