If you're like most 401(k) investors, you didn't touch your investments last year, in the darkest hours of the bear market. That was hardly a sign of buy-and-hold discipline. The majority of 401(k) participants haven't done anything with their accounts in years.
Say you entered last year with a 60%-stock/40%-bond mix. If you didn't rebalance, that's now a fifty-fifty split. Since 1926, the annual return for a 60-40 mix has been 8.5%, vs. 8.1% for the even split. Over 10 years that can mean an extra $41,000 in a portfolio worth $500,000 today.
On the plus side, the bear market has already "rebalanced" the portfolios of those who took on too much risk. In 2007 a third of workers in their fifties - for whom a 60/40 portfolio is typically a sensible proposition - held more than 80% of their 401(k)s in stocks; that's down now.
Say you entered last year with a 60%-stock/40%-bond mix. If you didn't rebalance, that's now a fifty-fifty split. Since 1926, the annual return for a 60-40 mix has been 8.5%, vs. 8.1% for the even split. Over 10 years that can mean an extra $41,000 in a portfolio worth $500,000 today.
On the plus side, the bear market has already "rebalanced" the portfolios of those who took on too much risk. In 2007 a third of workers in their fifties - for whom a 60/40 portfolio is typically a sensible proposition - held more than 80% of their 401(k)s in stocks; that's down now.
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