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Trading and 401k's

  • #1
  • First Post: Nov 21, 2008 8:35am Nov 21, 2008 8:35am
Hello all

Been around forex for a while. Still demo trading but what I now know about trading prompts some questions about 401k plans. When I contribute money to my 401k, does it mean that I am automatically entering a "long" position on the stocks, bonds, etc that the fund manages? or are there traders entering and exiting positions on my behalf? What prevents us from staying on the sidelines during times like this. I just have a hard time listening to all those reps from the retirement companies that just keep telling you no matter your losses keep contributing because the market will come back. Is there a way to pull out without paying the penalties and wait for a better time to re-invest?

Any comments on this?
Please pull my head out of my ass, I am running out of oxygen...
  • #2
  • Nov 21, 2008 8:41am Nov 21, 2008 8:41am
Quoting PiPtHiEf
Hello all

Been around forex for a while. Still demo trading but what I now know about trading prompts some questions about 401k plans. When I contribute money to my 401k, does it mean that I am automatically entering a "long" position on the stocks, bonds, etc that the fund manages? or are there traders entering and exiting positions on my behalf? What prevents us from staying on the sidelines during times like this. I just have a hard time listening to all those reps from the retirement companies that just keep telling you no matter your losses...
Convert to a self-directed IRA.
  • #3
  • Nov 21, 2008 8:58am Nov 21, 2008 8:58am
Thanks Ron.

A while back I changed jobs. My 401k money was automatically transferred to an IRA and ever since it went in there it hasn't gone up or down. I know if it still in a 401k account it would have lost lots of money just like my other coworkers. It felt good to know it was like closing a trade a winner. However, I am considering my options before rolling over. A self directed IRA seems like a pretty good idea. Will keep reading on. Know, for educational purposes, am I constantly in a trade when putting money in my 401k?

Thanks
Please pull my head out of my ass, I am running out of oxygen...
  • #4
  • Last Post: Nov 21, 2008 9:23am Nov 21, 2008 9:23am
Quoting PiPtHiEf
Thanks Ron.

A while back I changed jobs. My 401k money was automatically transferred to an IRA and ever since it went in there it hasn't gone up or down. I know if it still in a 401k account it would have lost lots of money just like my other coworkers. It felt good to know it was like closing a trade a winner. However, I am considering my options before rolling over. A self directed IRA seems like a pretty good idea. Will keep reading on. Know, for educational purposes, am I constantly in a trade when putting money in my 401k?

Thanks
Any retirement plan is usually based off of the value of the underlying assets. With 401Ks those underlying assets could be a specific stock, mutual fund, CD, anything. It depends specifically on what your plan says.

As for whether or not you're constantly in a trade, yes and no. You're constantly in a trade given the fact that you're in a 401k in the first place. Is the money you're using physically in a trade or in any other underlying security? Most likely, no. A lot of funds are converting to cash positions at the moment. If 3rd quarter GDP is negative, we'll officially be in a recession. And as with any recession, it's basically a shopping spree for bargain hunters (buy low....)

http://money.howstuffworks.com/perso...nning/401k.htm
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