Hey everyone,
I’d love any advice on how you’ve resisted the urge to panic sell (or drastically rebalance) to risk-off positions?
In my case, as a 36-year-old, I really regret changing the stock/bond mix in my 401(k) more than three times over the past year. About a year ago, I kept waiting for the market to fall apart because of tariffs and all the geopolitical uncertainty, so I shifted to a 60/40 split between stocks and bonds.
But as I watched how resilient the market’s been, I kept moving back toward equities. In the process, I’ve probably missed out on ~10% gains.
I keep telling myself, “Don’t touch the 401(k),” but man… the temptation is almost always there. I’ve committed to 50% VOO, 50% Vanguard Target 2065 (because I want international exposure).
One solution that’s actually helped: I removed my 401(k) from my Monarch Money account, so I don’t see it whipsawing up and down every time I check my budget and other accounts.
*edit
This blew up! I really appreciate all of the thoughtful responses, and much deserved ribbing from a few of you. There's a ton of helpful insights here:
"This is a good learning lesson where you sold when things seemed scary and bought when things felt better, which lost you money."
"One thing that helps me is investing into an IRA alongside my 401k. I made the rule for myself that the 401k is set it and forget it. Any stock trading, market timing, rebalancing I do in the IRA. It scratches my investment itch. Regardless of what’s happening in the world or the markets I just leave the 401k alone."
"Sounds like you should flip it all to the 2065 and never look at it again."
"I'm allowed to reallocate every 6 months (Jan 1 and Jul 1)."
Posted by AirwickS
39 Comments
Information and an understanding of your own psychology/risk tolerance is the best thing to arm yourself with.
However, if you have had the urge in the past to switch your asset allocation then your risk tolerance may not be as aggressive as you think
The market has proved to be very resilient over time
This is a good learning lesson where you sold when things seemed scary and bought when things felt better, which lost you money.
When things seem scary is more often than not the best time to buy, as counterintuitive as it seems.
Bonds aren’t risk free either, inflation is always a concern especially with threats on fed independence.
You’re 36… I’m 36… markets collapse and recover and at our age it doesn’t matter, just keep putting money in. I’m almost entirely in the S&P for my retirement accounts and have other “play money” accounts. When I get closer to retirement I’ll start considering shifting money.
Log off and fight the temptation
Sounds like you should flip it all to the 2065 and never look at it again.
I’m flipping more to international daily right now in trading account and retirement accounts. As a general rule don’t mess with the 401k. If you want to dabble and think you know stuff, use the trading account.
Don’t look
One thing that helps me is investing into an IRA alongside my 401k. I made the rule for myself that the 401k is set it and forget it. Any stock trading, market timing, rebalancing I do in the IRA. It scratches my investment itch. Regardless of what’s happening in the world or the markets I just leave the 401k alone.
Something else is that I firmly believe that for anyone under 50, time in the market is better than timing the market. You either believe it or you don’t. And if you do, remind yourself of that when there’s fear. You have to have some type of plan or strategy for investing. For my 401k it’s time in the market. And I stick to the plan. It’s tough when things are down but great when things are up, and there have been more up years than down and history says over the next 30-40 years it should continue to be the same. So that’s my plan and I stick to it. When markets are turbulent I just stick to the plan. Because otherwise I’m just panicking short term in a LONG TERM account. And I remind myself that making short term moves in this account doesn’t align with my overall goals for the account. I have to tell myself these things during tough periods. I had to remind myself.
Talk to yourself about what is your plan or strategy. Then let it play out.
I had a similar problem last year. One thing I’m trying now is a “no impulse moves” rule for myself. I’m allowed to reallocate every 6 months (Jan 1 and Jul 1). If I think a reallocation makes sense, I wait to see. If it still makes sense on the day, I reallocate then. Obviously, this still requires self discipline, but I didn’t have any rules for myself before.
Always learn from your reactions, it will tell valuable information about your risk tolerance and adjust according that risk tolerance.
> I’d love any advice on how you’ve resisted the urge to panic sell
## _Stonks_ only go up.
Good call not looking at your retirement accounts all the time. Sometimes you need to stop yourself from being a paper handed bag fumbler.
i just remember that the times i sold panic had cost me hundreds of thousands of dollars
The pain of selling and then seeing the market outperform without you should teach you the lesson to stop. Activity in a portfolio only hurts returns in the long run. If you haven’t learned that lesson the first time than you’ll learn it again soon
What good would it do to change my mix? If VOO (or a similar fund) crashes, the .gov will simply print money to shore up the market. Wonder what’s going to happen to my dollar assets? The only time I’ll change my mix is when I’m approaching retirement.
You don’t have to like at your 401k let and and forget it. Ride the ups and downs. Do not try to trade in a 401k. If you want to dick around have a brokerage account with money you can afford to lose.
I’m also 36 and I’m all in on high growth and taking risks. Unless you need the cash and plan on buying something big soon, look at things long term and know there’s gonna be up and down but over the long term we should be good long term and you’ll get a better return in equity than bonds
Another secondary point, don’t beat yourself for panic and FOMO decisions you made before today. This is hard because you mentally calculate the lost gains or locked in losses. Just avoid over trading in the future.
You need a written investment plan. You need to refer to it anytime you make any investment decision. Otherwise, you are just flying by the seat of your pants wildly being pulled in any direction by your emotions.
It’s simple, you need that money today? Tomorrow? Next year? Or even 3-4 years from now?
Well then you should not have invested it in the first place in stocks.
You need that money for retirement in 20-30 years? Then just chill out my man, all you do today by messing with the funds is hurt yourself in the future. Let it ride and put the statements aside. Ignorance is bliss and keep your eye on the target 20 years from now.
Because I promise you this, if the world crashes down for good then it really doesn’t matter anymore at that point does it?
During bull markets i check my account balances 3x a day and during bear markets i delete the app off my phone, pretend the account is a 30yr time capsule, and completely forget about it
Don’t look/zoom out
A few months ago I went 30% into international funds and it has been a really good decision so far.
You may have to admit you just SUCK as an investor. Most folks just don’t have the emotional ability to be a good investor. I first started investing in 2008 in the height of the worst year EVER of investing. Did it as 100% equities. Thought it was a breeze.
Have been 100% equities ever since. Still think it is a breeze. You don’t even want to know how much my portfolio changes in an given month. I LITERALLY don’t care.
You might never get to that point. My advice would be take yourself out of the equation. Set up you plan, set up everything on auto investing each month, and then STOP watching investing stuff. Go touch grass and find other hobbies. Your personality might not be suited for investing.
it’s easy once you can understand why youre buying a stock.
don’t buy stocks because you like them or think they are good. buy companies who have good financials, good growth, good products and room to grow.
if you buy them and it goes down, why would you panic, knowing what you know? you wouldn’t. you would buy more.
second, understand, you are buying a piece of a company for the next 20 years. If it goes down next year, that’s meaningless so why would you panic?
Keep a year or 2 in short term cash equivalent, or however much is needed to feel that you can weather a multi year downturn as long as you have this emergency fund and won’t need to sell index funds. Suppose you have 2m and you only spend 20k a year to survive. You could keep 100k in SPAXX for example to live off of for 4 to5 years, while the 1.9m is still invested. You’ll still be 95/5 equities/cash so youll keep up with the market.
You are too young to have any bonds IMHO. Accept a possible 30% drawdown in an all stock portfolio, or a bit less with 10% bonds, and check back in 20 years after 12% compounded gains. You will have literally life changing money. Just do VOO/VXUS or VT. Every time you get the urge to time the market, zoom out. You will see up and to the right. And now is not the time to not be fully invested, the money printer is on and you need to hold assets like stocks.
I took a good chunk out and placed it in CDs earning moderate guaranteed interest. I felt like we’re getting into a place of overvaluation and speculation by a handful of companies, and it feels like 99, 97-08 and 2020 again. At 50 with the goal of retiring at 55, I figured being safe and cautious was the way to go.
That being said since 22 I’ve never taken a dollar out of equities, and kept pounding in money.
Now that we’re taking over sovereign countries and meddling in places like Iran/ Greenland, I’m glad to be in a safer position even if that means forgoing some incremental gains.
I’ll be happy to jump back in with a portion or all of that sidelined money when there are real estate or equities markets to be had at a discount, better value.
At this point addtional gains will be cherries, not the ice cream or the bowl, so to speak.
I think it helps not to look at your account very often.
I check investments only one or two times a year, and that’s just for downloading tax forms and investing dividends and new money, which I do manually. I could imagine checking quarterly, but not more often than that.
Otherwise, I think of it like I would a passively-owned farm, which would have the advantage of not having a price quoted on it almost every day. Constant price quotations can be useful, but also very damaging for an investor’s mental health. Be sure to take care of your mental health; it’s worth more than money.
Best of luck to you.
If we survive, you’re going to want it, and want the % you will have made over the decades to retirement (if any). If we don’t, you will have bigger problems to worry about.
Is mostly how I am getting through it, lol. You and I are young (I promise?) enough to age through many temporary consequences to all of this shit. Older folks living on fixed income and retirement should be cashing out and worried, they won’t have time to make back what they lose when all of this collapses (temporarily or otherwise).
Yeah I just don’t look at it, except for end of year in case I can tax loss harvest some lots. I’m still 100% VTI and equivalents so nothing to rebalance either. Nowhere near retirement yet so there’s nothing to be gained by overreacting to the news (especially with a president who is clearly manipulating the market for his buddies to insider trade on).
100% vtsax and chill
Historically stocks only go up. Look at the chart and zoom out.
I’m going to give you a low effort answer: I remember what happened the one time I panic sold the day Covid tanked the market. I sold low, sat out the recovery and bought back in high. Classic fool hung out to dry. People lose the most money when they get greedy or scared. I try really hard not to feel either and follow rules I’ve laid out in advance.
Pull up a chart of S&P performance. Start with year-to-date. Then zoom out to one year. Then five years, then ten. It’ll be OK.
“I’m allowed to reallocate every 6 months (Jan 1 and Jul 1).”
No? You aren’t allowed to re-allocate, period. You aren’t out smarting anyone, you lost money by doing it your way. Stick to a plan and stop thinking you can time the market.
“I’ve committed to 50% VOO, 50% Vanguard Target 2065 (because I want international exposure).”
Then stick to it then. Don’t open your account for a year.
How do you resist the urge to panic sell? By remembering how much you lost the last time you failed to resist the urge to panic sell
You need an asset allocation that will be comfortable for you regardless of the market conditions
My advice is to never change a current account. What’s in VOO stays in VOO. My IRA will always be based on the broad US stock market. In my brokerage account, I can choose to change where my future dollars are allocated, so I might look at crypto, gold, option trading, specific stocks, etc. But i never change or transfer any of the funds in my main account.
Also, look at your timeline to retirement. At 36 you likely have 25-30 years of work life before retiring. Why do you care about a short-term possible dip in the stock market?
WTH is wrong with you. You’re costing yourself money! Leave it alone. Rebalance once a year. Confirm your money is being added and that’s it.
SSRIs