I managed to get the rollover checks from my old employer’s 401k already and I am in the process of depositing into my new 401k plan however I have run into a snag….
The new provider has absolutely horrible 401k fund options. I haven’t downloaded all the prospectus yet but the ones I have downloaded and reviewed have, IMHO, horrible investment options, high expenses, and few choices.
I called and asked if they had something like Brokeragelink over at Fidelity and they said no, not available. So my only option is to pick from 3 bond-cash like funds with high expenses and low returns. I would have preferred an option to simply buy T-bills but that’s not possible.
Suddenly, I feel like my money is being held hostage but I had no choice, in order to invoke the rule of 55, the money has to be in a 401k fund because IRA’s don’t qualify.
With the stock market at over-valued nose-bleed levels, I have no interest in buying at the top so I will buy the bond fund and let it sit until the next major market correction which I think will happen in 2026.
Timing The Market
The common argument against “timing the market” goes something like this: Missing just the 10 best days over a 20-year period can cut your returns by half or more.
Additionally, historically the strongest gains often happen right after big sell-offs-when most people feel least comfortable buying.
If these statements are true then it should be obvious that what you should do is wait for market corrections before investing large sums of money.
So what’s my plan?
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Step 1 – Hold cash
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Step 2 – Wait for 20% correction (from peak)
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Step 3 – Invest 33% of funds into market
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Step 4 – Wait for another 10% correction (from buy in)
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Step 5 – Invest 33% of funds into market
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Step 6 – Keep remaining 33% reserve until another 20% correction
What if a 20% correction never comes? Simple, I will hold cash and earn the paltry 3% (or whatever) interest in the fund. Note this plan is for the large sum I am rolling over not continuous contributions into the 401k. For the cyclical paycheck 401k contributions, I will be investing in the market but 1/3 of those funds will go into cash/bond funds.
By virtually every measure, the stock market is over valued by at least 40% to 50% and you can check various indicators over at Current Market Valuation. Warren Buffet’s fund has also increased its cash position again which should serve as a warning to everyone investing in the market.
Share The Wealth
Does your 401k have horrible investment options? Let me know in the comments below.