← Back to context

Comment by ambicapter

16 hours ago

You’ll pay massive penalties on that, another option is options (heh) but I’m not finance-literate enough to know how to pull it off.

12 comments

ambicapter

Reply
drivebyhooting  15 hours ago

I’ve made my peace with the “massive penalties”. I benefited from employer match in the past. I want the money now, not when I retire.

  • scuff3d  15 hours ago

    You gotta do what you think is best, but I hope for future you's sake you decide to not pull the money out. Or if you do you have other retirement plans.

    I'm trying to help my parents now their at retirement age and am seeing first hand what not planning for your future looks like. They hit retirement with nothing but a small social security check every month. Not even enough to cover rent in most places.

    I don't know how much you have in your 401k, but it will be worth literally hundreds of thousands more if you pull it out when you retire. You aren't just paying the penalties now, you're paying for potentially decades of compounding.

kvuj  15 hours ago

You could just buy deep out of money SP500 puts expiring in 1+ year. That way you would be "insured" against the bubble popping.

The thing is, every dollar you spend on insurance is a dollar (and its interest) you lose. Furthermore, we don't know when it will pop. 1 year? 5 years?

The more reasonable solution is probably gradually reduce exposure to US markets by selling SP500 shares and turning to Europe and emerging markets ETFs. No need to cash out 401k.

  • timmmmmmay  15 hours ago

    You should backtest this strategy over the last 20 years before you make serious decisions off of the vibe from internet comments

    • kvuj  15 hours ago

      20 years is not enough.

      If you just look at the past 20 years, the US has had exceptional returns compared to the rest of the world.

      The thing is, historically, high PE ratios like what we're seeing in the US do not correlate with short term returns that are as high. Expected future returns decrease as the PE ratios go up in a pretty linear fashion.

      https://am.jpmorgan.com/us/en/asset-management/institutional...

    • alasdair_  15 hours ago

      Why 20 years? Just because we know, post hoc, the usa outperformed other places in the last 20 years, in no way means the next 20 years will be the same.

      If you want a different point to backtest from, try Japan in the 80s and early 90s