More Help On Asset Allocation, Thanks.

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Re: More Help On Asset Allocation, Thanks.

Postby retiredjg » Tue Jan 29, 2013 10:01 am

goodoboy wrote:Let's say a person has a 401k he is contributing to for 5 years and has to switch jobs. For instance me. What happens to all the dividend gained while investing in my portfilio? Are they reinvested when divends are received?

My understanding is that dividends are reinvested when they are paid - at the end of the day, you just have a few more shares.

I have also read that dividends can be kept in a cash account within the 401k, but that might only apply to dividends from individual company stock in your 401k, I'm not sure. Either way, your dividends are not lost - they go with you (probably in the form more shares) when you switch jobs.

I also think part of your question is about compounding. This simply means that your earnings start making earnings (your dividends start getting dividends). This happens any time you reinvest your earnings (dividends). There is not some magic that makes it better for you to stay in one fund forever. The dividend "snowball effect" is happening in all of your funds, not just the ones that you have held a long time.
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Re: More Help On Asset Allocation, Thanks.

Postby goodoboy » Tue Jan 29, 2013 12:36 pm

retiredjg wrote:
goodoboy wrote:Let's say a person has a 401k he is contributing to for 5 years and has to switch jobs. For instance me. What happens to all the dividend gained while investing in my portfilio? Are they reinvested when divends are received?



I have also read that dividends can be kept in a cash account within the 401k, but that might only apply to dividends from individual company stock in your 401k, I'm not sure. Either way, your dividends are not lost - they go with you (probably in the form more shares) when you switch jobs.


Thanks

I think whats confusing me and maybe I am over thinking as usual is if a person switch jobs after holding a fund for 4 years, that fund gets cashed out and either rolled over to new 401K or IRA Rollover. So all the dividends and earnings is sold off and then go into another fund in the new 401K.

So I am thinking there is no loss or anything just all the earnings and dividends going into a new fund and then continue growing from there.
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Re: More Help On Asset Allocation, Thanks.

Postby retiredjg » Tue Jan 29, 2013 12:56 pm

goodoboy wrote:So I am thinking there is no loss or anything just all the earnings and dividends going into a new fund and then continue growing from there.

Correct.
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