So what is a person to do if their 401k plan only offers funds in stocks or bonds? If interest

[still_one]

rates go up the bond fund value goes down, and if interest rates go up stock funds tend to go down also

So if a 401k does not have an option for a money market fund, and if you participate in such a 401k plan, you have no choice but to ride it whichever way it goes, and do not have a choice to keep it in a neutral place like a money market until you feel comfortable jumping back in

[reformist2]

1. For safety, find the shortest-term bond fund you can find.

When interest rates rise, long-term bonds go down a hell of a lot more than short-term bonds. A rough way to measure potential losses/gains by the maturity of the bond. When interest rates rise 1%, for example, a 5-year bond will drop by roughly 5%, but a 20-year bond will drop roughly 20%!

[badtoworse]

3. I agree, if you need a safe harbor

Alternatively, you could go 60% stock fund and 40% bond fund if you want to take a balanced approach for a longer time horizon. In my experience, it's unusual for a company not to have some kind of cash option.

[Chan790]

2. You have the right to rollover whatever balance you have (with some limitations) to an IRA

Any licensed financial adviser can help you with that and will know what those limitations are. (Usually they have to do with how much of a balance you have to leave in the 401K (usually enough for your employer to be able to reverse the current quarter's employer-match if you're fired.)...which you do not want to close anyways as you want to continue to collect your paycheck deductions with employer match.) An IRA will always give you more options and control over your money...also are typically financially advantageous for other reasons...lower fees among them.

Go in to your bank or CU and ask to speak to someone about your options.