401K allocations
Hi Terry, I am 50 years old with a 401K at T Rowe Price. The value is 475K and I max my annual contribution at 12%. Currently my allocations are 85% stock, 8% bonds, 4% money market and 2% other. I have been questioning lately if it is good idea to have so much allocated to stocks. I figure I have 15-20 more years of work. Do you recommend diversifying more at this age? Thank you
Terry Says
Gosh, I’m terrible at market timing. Last year, after a 25% gain, I would have suggested moving some to a MM alternative. Then you would have missed out on another 24% return THIS past year!!
So, I’m probably the wrong person to ask.
Instead, ask yourself whether you’ll feel worse if the market has a third record year and you miss out on some gains, or feel better if you take 20% off the table and move it to a MM fund, avoiding a potential big loss!
