IRA Rollover

Archive for February, 2008

Question: Switch to less risky investments before 401k Rollover?

I’m changing jobs in a few months and will rollover a sizable 401k into an IRA. I’m thinking about gradually changing to less risky investments (from stocks to money market) beforehand just in case the stock market tanks before I leave and I will be forced to sell the investments at lower prices. Does this make sense or am I being overly paranoid?

Answer: Not being parnoid at all. The market has every indication that it might have formed a double top. Little early to tell just yet, but could be. If so that is not real good news. The fundamentals look somewhat less than promising also especially with the unsettled real estate markets. Since 401k accounts are not subject to tax when switching investments, there is no reason not to play it a little safe if you are so inclined especially if it makes you sleep more soundly at night not worrying whether tomarrow is going to bring another 200 to 400 point drop in the Dow. You can of course also play it a little less risky by switching to a more balanced fund or funds. Sort of half and half so to speak.

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