How Low Can Your 401(k) Go?

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401k Bargains

Why would so many people take money out of their 401(k)? There is only one word - FEAR.
Warren Buffett likes to say that to be a successful investor, don't follow the crowd. "Be fearful when others are greedy, and greedy when others are fearful."
http://www.brainyquote.com/quotes/authors/w/warren_buffett.html
For those who have at least 5 or more years to their retirement, they need to stay invested, speak with a professional advisor to check their diversification and risk tolerance, and think LONG TERM.
The four worst years in the S&P 500 since 1930 are
2008, 1937, 1974, and 2002. Here is something interesting you may not know - returns (also S&P) from the years following these "down" years.
1938 +31.1%
1975 +37.2%
2003 +28.7%
2009 ??
So if an investor had "sold out" in one of these years, they would have missed a lot of gain. What does 2009 hold? We don't know, but as Warren Buffett also says, "If you wait for the robins, spring will be over."
Read more about 401(k) Bargains at http://401kcoach.myblogsite.com/ You can also visit my website at www.helpmy401k.us.

Dean Voelker of IN @ Apr 30, 2009 17:01:04 PM

Advice for Retirement Annuity

Slovell55, I would need more details about your financial situation before I could give you advice.
How close are you to your target retirement age?
Having said that, I can still impart some words of wisdom. If your 401k is keeping you worried constantly, keeping you from sleeping, then you need to get out.
But before you do, do your homework. Do the math. How much money do you lose if you liquidate?
Of course no one knows what the stock market will do exactly, but all are in good agreement that the trend is down. If you are young and have decent cash, maybe it's worth it to ride it out. But be prepared to see -60% losses 2-3 quarters from now. If you can stomach it and the math makes sense, stick with it. If not, pick up the phone.

Ed of TX @ Oct 23, 2008 00:03:36 AM

Advice for Sharon of VA

Sharon,
It seems like you feel you have worked very hard for your money and can't bear to see it evaporate in front of your eyes while your fund manager tells you to more or less hide cash under your mattress with a money market account.
Truly, if you do not have market knowledge, you are safer not investing. So four words of advice:
CASH AND FETAL POSITION!

Ed of TX @ Oct 22, 2008 23:57:41 PM

Retirement Annuity

Any advice on whether I should surrender a retirement annuity which is losing money fast with this market flucuation. I know there is a surrender fee and I contibute each month to it..

slovell55@comcast.net of VA @ Oct 20, 2008 16:28:25 PM

I retired in 2005 and do not work. In one month I already have lost from 112,000 to 94,000in my Retirement Fund for 2015. When I started in 2005 I had $133,000 total. I am very upset about this loss. The mutual fund guys tell me last month that the only way I may go is by money market. I dediced not too at that time, but since then, I have lost 28,000 in one month. Also, I do not have extra monthly contributions to add to the portfolio. I tell myself that I wil be better off to stay in, but at this rate I will not have any of my retirement left that I worked so hard for. I am paying at least 20 percent of my retirement annuity to pay off credit card debt and make more thatn the minimum. Any advise.

Sharon C. Lovell of VA @ Oct 20, 2008 16:22:16 PM

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How Low Can Your 401(k) Go?

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