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I plan to withdraw my 401k in 3 years. How should I invest for such a short future?


I want to switch up my investments to make it more aggressive. Would that be a smart move, and how should i go about doing that?

Generally the shorter your time horizon, the less risk you should take on.

If you plan to withdraw in 3 years (a very short time horizon), you should be more conservative rather than more aggressive in your investments.

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my mom did the same thing with her 401 k and used it as a downpayment for her house she lives in. i'm not sure if that will help. people use their 401k for a lot of things. and my parents remortgage their house if they want somehting else. like when they got thier 4 wheeler, and thier pool, and this year they might add on a garage. to build up the property vaule

I suggest you to open a brokerage account and invest in the stock market with the help of a Financial Advisor like myself.

I don't know how old you are but usually old timers are not allowed to invest too aggressively because they will die soon and they need the money to pay for their expenses which can be very high in some cases.

Many retired people move to Mexico (It's extremely cheap to live there and the weather is extremely good for your health in some parts of the Country)

Retirement is complex.
If you need more detailed help you can drop me a line.

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Some things you might want to consider:
If you are under 59 1/2 and you take money from a qualified 401k you will incur a 10% penalty tax from the IRS!! Plus you will need to pay income taxes on what you receive. ie. if you have 10,000 in a 401k you will probably only receive around 6000. i suggest rolling your 401k into an IRA so you can keep the tax deferred status on your account. if you absolutely need to take money from your 401k, there are some exemptions from the 10% penalty. ie. you can take up to 10000k for the purchase of your 1st principal residence.
401k usually have a longer time horizon because they are retirement vehicles. You can still be aggressive to a point in your 401k but stick with ETF, or Equities that have strong for-casted growth. Optimal scenario is however not to touch your 401k until you retire. (or are over 59 1/2)

If you are at an age where you will soon begin withdrawing from a 401(k), it is usually suggested that you move to more conservative holdings (if you're asset allocation has been aggressive) in order to preserve capital.

As such, you'd typically hold a combination of stocks (for growth aggressive enough to keep up with inflation), bonds (for more conservative growth with lower risk), real estate (REITs) and cash. What percentage of each you hold depends on your age and risk tolerance. If you only have enough to retire on, capital preservation takes precedence. If you have excess money, then you can afford to risk some of it for more aggressive growth.

If I were nearing retirement, I would probably lean toward index funds. Picking stocks is not for those who are adverse to risk. Vanguard, T Rowe Price and Fidelity all offer a wide variety of funds. American Funds also does this, but their funds typically carry a load. You'd be better off putting that money to work for you rather than paying that load to a broker.

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