Hi guys. I’m under 30 years old. I’m thinking of leaving my money in 401k BUT just stop contributing anymore temporarily until the market recovers a bit. The money I was contributing to my 401k I will switch to my online savings account at 3% interest. Good or bad idea?
Bad idea. Look up the term ‘dollar cost averaging’.
Would you rather wait to buy when the market is up? ;)
Seriously, what Laz said. DCA. The people who lose the most money are the ones who jump in and out (excluding, of course, the goldbugs. They have the worst sense of timing the universe has ever known). :)
Here’s what you could do. With the money you now have in your 401k, you could move it into you plan’s money market account. Then you could keep contributing, because now may be a good time to buy. And that way you will continue getting your company match.
Or, you could open a Roth IRA and invest the money in a money market account or other “safe” investment within the IRA. BUT, keep contributing to the 401k up to the company match, because you don’t want to leave free money on the table.
At your age, you should just keep putting money on a regular basis into your 401k or IRA, keep it in sound funds that you don’t need to manage often (ie, don’t bother looking at them any more than perhaps once/year) and not mess with it.
Dollar cost average.
For someone in your age bracket, the stock market just went on sale. You should avail yourself of the bargain.