The two 401(k) risks now.
There are only two.
Not the endless list the financial media throws at you.
And you can only pick one.
First, the risk of losing more 401(k) principal.
This is the part nobody wants to face.
How much more are you willing to lose?
In dollars or percent of your 401(k).
Forget about the number on your last 401(k) statement.
Or the last time you looked online.
That money is gone.
The only question that matters now is:
“How much more 401(K) losses am I willing to accept going forward?”
You just figured out your 401(k) “stop loss.”
Your mental and emotional “do something” number.
If your 401(k) drops to that level, you don’t debate.
You don’t panic.
You sell the worst mutual fund(s) you own.
And move the proceeds into your 401(k) money market fund.
This one step reduces your future 401(k) losses.
Protects your remaining 401(k) principal.
And gets your 401(k) ready for the upcoming “sale.”
Second, the risk of missing the next stock market bounce.
This one is harder.
Because every bounce looks like THE BOUNCE.
I can’t tell you a fake bound from the real bounce.
But when that moment comes, you’ll want 401(k) cash available.
To buy the best mutual funds on your plan menu at “sale” prices.
So, take full advantage of your two options:
Establish stop loss levels and protect your 401(k) principal.
Have a 401(k) money market balance for the upcoming “sale.”
Which risk feels harder for you—losing more 401(K) value or missing the bounce?
P.S. Recovering lost 401(k) principal requires upgrading your 401(k) mutual funds.
