Purchases Are Made at Regular Intervals
One of the advantages of a 401(k) plan — convenience — is also one of its drawbacks. When you contribute to a 401(k), money is taken out of your paycheck at the same time every month. While it’s nice that you don’t have to put any effort into making contributions (or even think that much about them), it also means you can’t take advantage of large market swings and opportunistically contribute funds at the best possible times.
Over the long run your contributions should theoretically average out, but you can’t move your capital in the midst of a market sell-off like you could in a regular taxable account or IRA.
