I was comparing notes with a friend of mine today in our respective 401k strategies. His strategy differs greatly from mine, but is a perfectly sound one. He is well diversified (unlike me... I'm entirely in stock index funds except for my small amount in stable value) and then leaves it alone. He hadn't even checked it yet this entire year until today. It turns out his rate of return is 15.X% so far this year... barely lagging me (I'm 16.8% at the end of the day today). So I asked what funds he was in. He had a variety but none had a return of more than about 10%. Hmmm......
He has a relatively new job so I asked him when he started contributing. It was before the beginning of the year. Hmmm....
Then I asked when did his company match, which is unusually good, kick in? Aha! It started in May... right when the stock market was down, and stayed down for a few months before climbing again at the end of the year.
In other words, he accidentally sort of did what I did. He beat all the markets he was into because he started contributing aggressively when stocks were low, which is where most of his gains were.
The comparison did make me research some other investment options (that I don't think I'll take but were interesting, like REIT's) and made him decide to set up automatic notifications for rebalancing. His account was way out of balance after not looking at it for a year. I didn't tell him that regular rebalancing is essentially what I do. :-)
First time here?
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