Market Downturn Taking a Toll on Our 401(k)s

I don’t check my 401(k) as often as I check my stock investments because, whether it’s up or down, I won’t do any on it until the rebalancing time which usually occurs at the end of the year. I have a very simply portfolio in my 401(k) plan with Fidelity. Currently my holdings include

• Fidelity Freedom 2035 (FFTHX)
• Fidelity Small-cap Value (FCPVX)
• Fidelity Real Estate Investment (FRESX)
• Fidelity Dividend Growth (FDGFX)

Though FCPVX is already a component of FFTHX, I use the extra shares to add more exposures to small-cap as FFTHX only invest about 7% of its assets in small-cap stocks (the same as I have both VTMSX and VISVX in my Roth IRA). The overall asset allocation is

with 55% in large-cap, 25% in mid-cap, and 20% in small-cap. I think it’s a quite balanced portfolio and with nearly15% in bonds/cash, it’s somewhat conservative given my age. However this portfolio didn’t weather the recent market downturn very well. As of August 16th, the year-to-date (YTD) return is 0.5%, barely staying in the positive territory. My wife’s 401(k) did a little bit better with a YTD gain of 1.1%.

I didn’t make any new contribution the my 401(k) since I changed job in June. My new employer only allows participation after the first three months. Fortunately, I contributed more than 20% of my salary when I was with my previous employer as I think the last quarter usually has the best performance of the year, so making bigger contributions in the first half of the year could improve the overall performance.

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