When will know the time to get back into equity mutual funds
Hello Terry,
I took your advise & sold the stocks & bonds in my 401K a couple weeks ago, down 12% from the high in Feb. I`d like to get back into equity mutual funds at the appropriate time but how will we know when to jump back in ? Thanks Terry
Terry Says
Well, depending on your risk tolerance, I never told anyone to get all out of the market. Just enough to sleep at night. If you’re looking to get back in now, you either misjudged your risk tolerance back then — or you are mis-judging it now!
The whole idea of getting a portion of your funds liquid was so that you could ride out the decline for as long as a few years. No one — especially me — can pick tops and bottoms. We can only adjust our investments to match our risk tolerance.
Stop trying to pick a bottom. The odds are 100% against you — less than a lottery ticket.
If you mistakenly got “all out” of stocks, and want to get back in, put a little in every month on schedule. But I’m glad you’re out of bonds. I think the consequences of this event have yet to fully hit the bond market and could last a very long time.
