Please help me in 401K

[kv968]

Agreed to (almost) all the above.

Slight exception being, having another child may make you rethink your risk tolerance, and/or if there's no EF in place, could indicate a need for a more conservative portfolio. Something to consider if you're managing your own account.

I was contemplating the possiblity of rethinking the risk tolerance due to another child also. But then I started thinking, what does this have to do with another child? This is for him and his wife's retirement. Whether he has no kids or 6 kids, he still has to have money to retire and I think the kids shouldn't really factor into that decision.

If he did take the kids into consideration, which way would he go...? More conservative since he might need the money in an emergency for the kids and then if he doesn't he's shortchanged himself for his retirement? Or, it could be argued, that he should be more aggressive so he'll have more money in retirement and have something left over for the kids. But then he may not be able to sleep at night and/or pull the money out the first time the market dips because he can't withstand the volatility?

I'm not sure either scenario would apply or that's what you're thinking but that's kinda what I'm coming up with. Either way, I say set the allocation at whatever he AND HIS WIFE are comfortable with. I may be missing something but I think it all comes down to their comfort level with risk/volatility so that they can make the most money in the long-term without panicking if the market dips.

[jpg7n16]

Well, I'll use myself as an example.

I'm pretty much 100% stocks (stocks and options). My overall portfolio has 1% in bonds. And I'll tell ya, it's a bumpy ride but I'm 27 and single and I'm super long term focused and can handle the swings.

But if I was married with two kids, I would personally rethink my strategy. Now there's a couple young ones counting on this money? Well I still enjoy my stock trading, so I won't stop that, but maybe I should shift my 401k to a more conservative mix to cut down on this risk. My kids are counting on this money, and I'd feel better if their future wasn't as bumpy.

That's my honest view. Having a couple kids would add about 10-20% bonds to my personal portfolio. Not because my need has changed, but because my mindset changed.

OPs mindset may not change at all with the arrival of the 2nd kid. And if going the target date route it won't change anything (I mean don't get me wrong, I love target funds, but let's be realistic, they only focus on the timeframe, not the investor). But if he's controlling his own risk level by managing it himself, it certainly could.

[kv968]

Well, I'll use myself as an example.

I'm pretty much 100% stocks (stocks and options). My overall portfolio has 1% in bonds. And I'll tell ya, it's a bumpy ride but I'm 27 and single and I'm super long term focused and can handle the swings.

But if I was married with two kids, I would personally rethink my strategy. Now there's a couple young ones counting on this money? Well I still enjoy my stock trading, so I won't stop that, but maybe I should shift my 401k to a more conservative mix to cut down on this risk. My kids are counting on this money, and I'd feel better if their future wasn't as bumpy.

That's my honest view. Having a couple kids would add about 10-20% bonds to my personal portfolio. Not because my need has changed, but because my mindset changed.

OPs mindset may not change at all with the arrival of the 2nd kid. And if going the target date route it won't change anything (I mean don't get me wrong, I love target funds, but let's be realistic, they only focus on the timeframe, not the investor). But if he's controlling his own risk level by managing it himself, it certainly could.

I understand where you're coming from and I totally agree. I'm in the same boat as you (not married, no kids) just older And yes, maybe having kids would make you want to "tone it down a bit" and that's reasonable but again, that just comes back down to the individuals' risk tolerance.

It that tolerance goes down for some reason because of the kids then by all means adjust. However if you're still willing to shoot for the fences perse, then go for it.

Anything in life could make you rethink your tolerance and you should adjust according. I'm not advocating timing the market, but even if nothing "significant" happens in your life except the fact that you can't stand losing as much as you thought you could, that within itself should trigger a reevaulation of your risk level.