Jan
federal employee 401k has several option for one's contributions to one's thrift. there are bonds, stocks of several risks, and a guaranteed fund.
the guaranteed fund makes less of course, but it is safe, you can't lose money.
i am sure that most thrifts have levels of risk in the options you can choose. right now it is scary to go with the aggressive model.
Answer:
Moon, I believe in bonds these days. There have been alot of bad news about 401 k's..
Answer:
What are you invested in now and how long do you have till retirement?
Edit: In a 401(k) plan, you are limited to the investment options offered in the plan - some have lots of leeway, others not so much. But remember that retirement investing is for the long term. Do not try to time the markets by shifting in and out of investments frequently. People who do this almost always come out worse off. If you're not into investing, read "Investing For Dummies" - a great starter book.
Answer:
If you are not retiring soon than investments in 401k should be viewed as a long term investment.
The allocations between various type of funds (stock, bonds) depends on your time horizon and risk tolerance. If you are young and retirement is a way off (and tolerate ups and downs) then more allocation should be given to stock versus bonds.
Again if retirement is off in the distance this a long term investment and changing between stock and bonds when things go bad in the short term will not help you in the end.
Answer:
Unless you are 65 years old and will need the money tomorrow, most of your 401(k) should be invested in stocks of some form.
Stocks have taken a beating in the last quarter or so. Part of the reason stocks have been beaten up is the economy isn't doing as well as it once was. Because of that, the fed has lowered their benchmark lending rate.
I think you've assigned the wrong cause to your 401(k) decreasing. It isn't from the interest rate cuts. It was probably from stock market decreasing (which reflects the downturn in the economy which precipitated the fed rate cut).
Most likely the right course of action is to do nothing, but check out your asset allocation and determine if you are still comfortable with it.
You are in this for the long haul and shouldn't be too concerned about quarterly performance (or maybe even yearly performance). Stocks have historically been the best investment over the long (decades) haul.
good luck!
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