I was thinking of a good strategy for investing my 401(k) money and came up with something. I need to run it by someone who knows a bit about 401(k) before I
feel safe implementing it.
Anyways, my plan is to stick with about 6 different mutual funds in my portfolio, all with Morningstar ratings of 4 or 5 and a 5/10 year return of at least 10%. That way I know at the very least the funds have a solid track record. The next part of the plan is to look at the qtd or ytd returns and pick the worst performing funds for that time frame out of the list of 6 mutual funds I chose. The idea is that they are solid mutual funds in the long run but are basically on sale due to their recent poor performance. My thought is I'm not chasing returns by investing in the best performing mutual funds that are already trading at their highs. Instead, in theory, they will bounce back eventually based on their 5/10 year performance and their Morningstar rating. So each quarter or once a year I was planning to change my future allocations to match this strategy. Keep in mind I am only planning on doing this for future allocations, not funds already invested.
So is this a good plan or will I be micromanaging my 401(k) and shooting myself in the foot or am I not making an sense at all?
Thanks in advance for your response
Anyways, my plan is to stick with about 6 different mutual funds in my portfolio, all with Morningstar ratings of 4 or 5 and a 5/10 year return of at least 10%. That way I know at the very least the funds have a solid track record. The next part of the plan is to look at the qtd or ytd returns and pick the worst performing funds for that time frame out of the list of 6 mutual funds I chose. The idea is that they are solid mutual funds in the long run but are basically on sale due to their recent poor performance. My thought is I'm not chasing returns by investing in the best performing mutual funds that are already trading at their highs. Instead, in theory, they will bounce back eventually based on their 5/10 year performance and their Morningstar rating. So each quarter or once a year I was planning to change my future allocations to match this strategy. Keep in mind I am only planning on doing this for future allocations, not funds already invested.
So is this a good plan or will I be micromanaging my 401(k) and shooting myself in the foot or am I not making an sense at all?
Thanks in advance for your response
