401K for dummies

[fishgetter]

What do do with the 401K move money to bonds or continue to take a hit? I'm an idiot when it comes to 401k money but I can read a -8%/year return and I understand that is not so good?

What is everyone doing?

[Duckwheat]

Hang tough. The only way to lose it is if you bale out now. Others are waiting to make a profit on your loss.

Hang tough!

Had another thought. Real Estate lost 5% in just one month here in Boise. Annualize that out and that is 60%. Where are you going to go right now and do better. 8% might not be that bad when compared to the market as a whole.

DW

[vudo]

Think about all the shares you're buying at a lower price! Don't bailout now.

[ampersat]

When the market started to tank out earlier this year, I jumped to bonds. Instead of losing 5-10% per quarter, I'm 'gaining' at +2%. Part of my 401k is sitting on company stock now and doing OK with it so far (+8% or so at this point) but the stock price is nearing my upper set point and is about ready to be sold, all of which will go back to the bond funds for stability. If the company stock hits my lower set point later on, I buy back in and wait for it to rise again.

[Point-of-Sale Clerk]

Some people saw this coming 10 months ago…
http://www.ifish.net/board/showthread.php?t=180125 \

It is too late to make a change now. You should leave it and in the Long run it will work out. However if you are going to take a disbursement sometime in the next 2 years you might consider cutting your losses.
This is not over, there are several other shoes that will drop both before and after the election.
Just so you know what I think of this situation, I have Zero dollars in stocks as of March. My money is in various family owned enterprises including the newest and most lucrative “Repo” business in Washington State.

[Penobscot]

The losses you are seeing now will be made up in gains. That is when weath is made.

For example you have 100 shares of a Mutual fund worth $50 a piece.
Lets say they lose 1/2 of their worth, you've realized a 50% decrease.

You are now able to buy those shares for $25 vs the $50 you used to pay.

When they rise back up, and most have for the last 80 years or so, you will have more shares, and they will be worth much more than $50 a piece.

Stay put. It's time like this where the Brokers and those with crazy amounts of money build their worth.


My above mentioned is only applicable to those at least 10 years from retirement and should not be considered professional advice, although that is what they will tell you and is what historically has happened.

[Gus Orviston]

Bonds are a fine place to hold your equity in times like this.. getting advice like "stay the course" doesn't take into account your age, risk taking anxiety, current net worth.. etc.. eg bad advice. You make the call - you may jump back in later at a bit higher spot on the way up (?), and be down a few percentage points.. but I don't think you can draw a linear line on this one. park you money and take a deep breath.

(?) don't know when that will be. but there are growth areas away from financials.

good luck, Gus

If you are down only 8% you are doing pretty good.

[matttheduck]

If you are not maxing out your personal contribution to your 401(k), now would be a good time to start. You should always be buying when everyone else is running around in a panic and jumping out of buildings.

[merrile]

buy buy buy, is right ! It will come back at some point. If your 77 then it might be a different story!

[pijon]

How you manage a 401k has a lot to do with your age. If you are 20 years from retirement than the other posters are correct. You are continuing to buy shares at a lower cost.( google dollar cost averaging)
You also have to manage risk. Most 401k plans have the S&P500 as an option. Unless you have a lot of financial knowledge, and if you are many years from retirement, about half of your investment should be here. The rest should be spread between growth, value, company, and international funds. Age is the key. I am 51 and thank god I got out of the market last year at the top. No inside wisdom, just plain luck on a hunch.
I a too near retirement to take risks and a large loss so I have most of my investments in fixed rate return. When you near retirement, 5-7 years, move to less risky investments. It is too much to post on a message board. Best advice is to go to the library and study personal finance. Teach yourself. Never trust a financial advisor or an insurance agent. They only get paid by selling you something. Your next best chance to get scammed is when you retire and rollover your 401k. Teaching yourself about personal finance will easily save you 6 figures.

The market will always go up and down. How far we go down this time is anyones guess. We have very large deficits and there is not any wiggle room for the fed to act. Scary situation for all of us. Could take several years for this to work its way out.

[RealTrouble]

if you are more than 10 years from retirement, stay in and keep putting money in. Remember, something like 95 percent of 5 year periods in the last 100 years (don't quote me on the 100 years thing, but its a LONG time)have resulted in a net gain for the market. Oh and 100% of 10 year periods have shown a net gain. If anyone has the exact numbers, I would love to hear them.

It is almost impossible to outperform the market on your own. Even most managed accounts cannot outperform the market on a long term basis. If you are in broad based funds and the S&P, you will do just fine.

Hang in there and keep putting your money in, the money you put in now will show great gains 5 years from now.

RT