Terry, please advise if the current downturn is a time to rebalance your 401(k) or if rebalancing should only be undertaken during peak highs. I know it isn’t a simple thing so any basic advice would be appreciated.

Terry Says:  There is no right time to do rebalancing.  When the stock market is high, you might want to take some profits and switch to more conservative funds in your 40l(k).  When the market has fallen, it might be the time to add more to your stock funds.  The only problem is that know one knows for sure when the market is “high” or “low”!    That’s why you should periodically and regularly review the percentage of your investments that should be exposed to the potential gains  (and losses) in the stock market.  That percentage is impacted by your current age, your estimate of when you will retire, and your own emotional risk tolerance.  Go to my website, www.TerrySavage.com, and click on Financial Engines to get a free review of your asset allocation and their advice on what is appropriate for your situation.  (You’ll have to give them info about your situation; it is completely safe.)

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