It is easy to fall into the financial media talking head trap.
The post-election stock market rally. Or the year-end stock market rally.
There is one more.
The Federal Reserve lowering interest rates rally.
The financial media will grab on to any reason they can find.
To promote the upward bias of stock prices.
Congratulations (in advance) for the great year in your 401(k) account.
But let’s not forget one thing…
A key 401(k) investment management concept.
Growing your 401(k) is one thing. Preserving those gains is another.
Use the last several months of the stock market rally to your 401(k) advantage.
Set a 401(k) “stop loss.”
Maybe not for now. But when you need it in the future.
Identify the worst 401(k) mutual funds you own now.
Sure, all the mutual funds you own now are up. But some have badly lagged.
A “stop loss” will help get rid of your worst 401(k) mutual funds.
A dollar amount or percentage.
If that mutual fund price drops significantly to the “stop loss,” you are gone.
Sale proceeds into the 401(k) money market fund.
Safe. Ready for the upcoming stock market sale.
If the stock market takes a turn for the worst.
A “stop loss” allows you to “do something” in your 401(k).
To not “give back” your 2024 recent double-digit 401(k) investment gains.
Even more important to future 401(k) growth…
The stock market will find a final bottom at some point.
When it does, you want to have a cash balance in your 401(k).
To upgrade the quality of the mutual funds you own going forward.
Simple. If you know how.
Interested in a 401(k) “stop loss” strategy now?
If so, comment below. Or let’s connect on LinkedIn.
P.S. A “stop loss” strategy may sound scary at first.
Once you use it in your 401(k). You will always use it in your 401(k).
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