Hedge against a 20% to 30% crash (annuity, bonds, IRA, brokerage)

[jimmybirdie]

I am close to 50 and I have saved 5.5x my pre-tax salary in 401K, IRA and regular trading account stocks.

Currently I have all of my 401k in Fidelity Contrafund which is heavily into Tech with Meta, Berkshire Hathaway, Amazon, Google, NVDA, Microsoft and Apple.
My IRA + regular account stocks are only in 3 stocks, NVDA, GOOG and TSLA.

I know these stocks, except TSLA, are at all time high. I am also nervous and will to accept smaller returns. I have been putting my extra cash into a local bank CD with 5% for 13 months. I want to reduce my exposure. For my 401K, which mutual fund is designed to have small gains and resistant to a major crash?

My company 401k has limited choices but I can move the money into a 401K brokerage fund so I can buy any mutual fund.

Thanks,

[mathjak107]

what about some more conservative funds like fidelity equity income or fidelity low priced stock fund …

i mean i can’t tell anyone what to do but these are a bit less aggressive.

some other thoughts are sub some equities for a close cousin like fidelity high yield .

or go balanced fund like fidelity puritan or fidelity balanced fund

[Lizap]

Other funds you might consider are VWIAX and PRCFX. Both of these are conservative allocation finds, the former is value and the latter more growth-oriented. You could pair the two together.

[rjm1cc]

You do not mention a ROTH. To help with future taxes you might want to start a ROTH

[GWoodle]

Originally Posted by jimmybirdie

I am close to 50 and I have saved 5.5x my pre-tax salary in 401K, IRA and regular trading account stocks.

Currently I have all of my 401k in Fidelity Contrafund which is heavily into Tech with Meta, Berkshire Hathaway, Amazon, Google, NVDA, Microsoft and Apple.
My IRA + regular account stocks are only in 3 stocks, NVDA, GOOG and TSLA.

I know these stocks, except TSLA, are at all time high. I am also nervous and will to accept smaller returns. I have been putting my extra cash into a local bank CD with 5% for 13 months. I want to reduce my exposure. For my 401K, which mutual fund is designed to have small gains and resistant to a major crash?

My company 401k has limited choices but I can move the money into a 401K brokerage fund so I can buy any mutual fund.

Thanks,

Simple change is to use funds not so heavy in Tech. Maybe a Dividend Growth Fund PRDGX or similar. Another option to have 20% bonds.

In your company 401K info maybe have options for Conservative investing. With Fidelity maybe have other options or suggestions.

[moguldreamer]

Originally Posted by jimmybirdie

I am close to 50 and I have saved 5.5x my pre-tax salary in 401K, IRA and regular trading account stocks.

Currently I have all of my 401k in Fidelity Contrafund which is heavily into Tech with Meta, Berkshire Hathaway, Amazon, Google, NVDA, Microsoft and Apple.
My IRA + regular account stocks are only in 3 stocks, NVDA, GOOG and TSLA.

I know these stocks, except TSLA, are at all time high. I am also nervous and will to accept smaller returns. I have been putting my extra cash into a local bank CD with 5% for 13 months. I want to reduce my exposure. For my 401K, which mutual fund is designed to have small gains and resistant to a major crash?

My company 401k has limited choices but I can move the money into a 401K brokerage fund so I can buy any mutual fund.

Thanks,

What are your choices in your company 401K?

[Listener2307]

Originally Posted by jimmybirdie

I am close to 50 .......For my 401K,....... which mutual fund is designed to have small gains and resistant to a major crash?...........

You are less than 50 and, if you are typical, have your best earning years ahead of you. I think you are too young to begin protecting yourself as if you were 70.

If there is a major crash you will be buying your shares at a greatly reduced price, and you may not want to pass up that opportunity. I worked and accumulated right through the crash of '87 and '08 and I'm glad I did.


Besides.... You could be wrong. There may not be a crash, so you'll forfeit gains you could have made.

And even if you are right... You will be passing up the opportunity to buy cheaply.

[jdhpa]

Originally Posted by jimmybirdie

I am close to 50 and I have saved 5.5x my pre-tax salary in 401K, IRA and regular trading account stocks.

Currently I have all of my 401k in Fidelity Contrafund which is heavily into Tech with Meta, Berkshire Hathaway, Amazon, Google, NVDA, Microsoft and Apple.
My IRA + regular account stocks are only in 3 stocks, NVDA, GOOG and TSLA.

I know these stocks, except TSLA, are at all time high. I am also nervous and will to accept smaller returns. I have been putting my extra cash into a local bank CD with 5% for 13 months. I want to reduce my exposure. For my 401K, which mutual fund is designed to have small gains and resistant to a major crash?

My company 401k has limited choices but I can move the money into a 401K brokerage fund so I can buy any mutual fund.

Thanks,

I agree with the above poster that, unless you're going to retire soon, you would be better off just staying invested in something like SPY and accept the ups and downs.

However, if you'd like to limit your losses in a possible market collapse, and if you're willing to accept a cap on gains, you could put your money in SPY, and create a 'synthetic short' of SPY with a combination of calls and puts. E.g., SPY is currently at $499.51. You could buy puts on SPY with a strike of $450, March 21 2025, for $13.20, and sell calls on SPY with a strike of $550, March 21 2025, for $16.08, so there is no 'out of pocket' money required to open these positions. Over the next year, the value of your portfolio will be its current value +/- 10%. So you can participate in some market upside while protecting yourself against a catastrophic collapse, and you'll still collect the 1.37% dividend.

Most likely you would come out ahead over a long period of time by just buying and holding SPY. But the above will limit your volatility at the expense of total return, if that's what you prefer. And there's nothing special about 10% or 1 year out, you can choose your percentage bands, and the current longest option is December 2026, almost 3 years out.

Good luck in whatever you decide to do

[leastprime]

Originally Posted by jimmybirdie

I am close to 50 and I have saved 5.5x my pre-tax salary in 401K, IRA and regular trading account stocks.

Currently I have all of my 401k in Fidelity Contrafund which is heavily into Tech with Meta, Berkshire Hathaway, Amazon, Google, NVDA, Microsoft and Apple.
My IRA + regular account stocks are only in 3 stocks, NVDA, GOOG and TSLA.

I know these stocks, except TSLA, are at all time high. I am also nervous and will to accept smaller returns. I have been putting my extra cash into a local bank CD with 5% for 13 months. I want to reduce my exposure. For my 401K, which mutual fund is designed to have small gains and resistant to a major crash?

My company 401k has limited choices but I can move the money into a 401K brokerage fund so I can buy any mutual fund.

Thanks,

If you have a brokerage (IRA or taxable account) account and cash in that account, and assuming you know enough about options and approved for that level of trading....
One could buy an option, long put, against one of your stock holding (1 option = 100 shares). The drawback if that you could lose the bet and thus you lose the premium for that option. Essentially an insurance bet which reduces the possible gain of a stock by the premium--there is no free lunch.
...the alternative is hold the stock and you take the risk of + or -.
Options are zero sum.

Another possibility are volatility ETFs. More open ended. You could make gains. You could make losses.

You must, do Your Due Diligence. The major brokerages, or Option Council, have online courses that will minimally get you qualified for trading options.

Volatility - Risk control is very difficult. You will either pay for risk control, in insurance premiums or pay for it as losses or lost opportunity, at realization-occurrence. Sometimes both.

Disclaimers.
I only minimally dabble in options and have not done so in the last 5 years.
I rarely use volatility ETFs.

We used some specialized ("mispriced") annuities in our IRA, at 58/62 in 2008-2012. The premium cost is relatively high and you limit gains in long bull markets, However, you limit the long and short Bear markets. JMO, long annuities, today, favor the annuity companies in today's environment.
YMMV

[mathjak107]

the op is asking for basic advice on a forum pertaining to funds and you want him to do option trading ?

really ?