War Prods Investors to Shift Retirement Money
NEW YORK -- As the U.S.-led combat against Iraq continues, 401(k) participants seem to be letting the war news slightly sway their transfers in and out of equity investments.</br></br>Granted, the moves represent "moderate" levels of activity given the total $75 billion in 401(k) assets tracked, according to Hewitt Associates, a global outsourcing and consulting firm in Lincolnshire, Ill. Nevertheless, they are significant because in general, participants don't tend to trade actively in their retirement plans. In fact, according to 2001 Hewitt data, only one in five participants makes any change to 401(k) plans in a given year.</br></br>Yet, on March 21, as news came out that U.S. troops were moving toward Baghdad, 0.16%, or $120 million, of total 401(k) balance was transferred. This is roughly double the average transfer activity of 0.08% a day.</br></br>Most of this money flowed into equities, a move that followed the Dow Jones Industrial Average's rise that day of about 2.8%.</br></br>Again, on March 24, as word of perceived minor setbacks to U.S. troops leaked out, 0.15%, or $112.5 million, of total 401(k) balances was transferred, much of that into fixed-income investments, according to Hewitt. The Dow average closed that day down 3.6%.