Oh yeah - remember when GWB was going around trying to convince people that it would be a good idea to privatize Social Security and have people invest their Social Security money in the stock market? That stock market's doing pretty good these days, huh? You know, McCain supported that privatization of social security idea. Those Republicans are pretty smart with the monies . . .
Oh yeah - remember when GWB was going around trying to convince people that it would be a good idea to privatize Social Security and have people invest their Social Security money in the stock market? That stock market's doing pretty good these days, huh? You know, McCain supported that privatization of social security idea. Those Republicans are pretty smart with the monies . . .
I plan to invest in the stock market and make a killing for my retirement when things go back up in a few years to decade.
I think that this may be a good time to jump into the stock market. If you're in it for the long haul, you've got some value over the last couple of days.
I'd like to point out that the economic downturn does hurt people that have been financially responsible in that their investments, retirement packages, home values, etc. have all been massively damaged. If someone is supposed to retire in the next couple of years, they may not be able to afford to due to their plummeting 401k values.
I'd like to point out that the economic downturn does hurt people that have been financially responsible in that their investments, retirement packages, home values, etc. have all been massively damaged.
Long-term investments, except for those in specific sectors where the risk was well known, will be fine. That's the point of long-term investment: it can ride out anything but Mad Max. If you can't ride out a downturn, then it wasn't actually a long-term-investment, and you were assuming a large risk in making it.
If someone is supposed to retire in the next couple of years, they may not be able to afford to due to their plummeting 401k values.
The nearer one gets to retirement, the more one's retirement investments should be transitioned from high-risk long-term area into short-term, low-risk, stable areas. People who did this would have been largely unaffected, and people who didn't were basically asking for their retirement funds to be ruined. This isn't even obscure advice: practically every 401k will tell people straight-out to do this, and most will do it automatically if you let them.
The nearer one gets to retirement, the more one's retirement investments should be transitioned from high-risk long-term area into short-term, low-risk, stable areas. People who did this would have been largely unaffected, and people who didn't were basically asking for their retirement funds to be ruined. This isn't even obscure advice: practically every 401k will tell people straight-out to do this, and most will do it automatically if you let them.
Hopefully those funds didn't consider investment banks that never had a bad quarter until now as stable areas.....
The nearer one gets to retirement, the more one's retirement investments should be transitioned from high-risk long-term area into short-term, low-risk, stable areas. People who did this would have been largely unaffected, and people who didn't were basically asking for their retirement funds to be ruined. This isn't even obscure advice: practically every 401k will tell people straight-out to do this, and most will do it automatically if you let them.
That's exactly what I was going to say. When you get close to retirement, you're supposed to move your investments from the high-risk long-term growth funds into the funds with almost no risk, like the money market accounts. If you don't do that, you're doing it wrong.
Hopefully those funds didn't consider investment banks that never had a bad quarter until now as stable areas
By stable, I mean short-term top-rated bonds and CDs. Remember: low-risk equals low-return. These investments exist just to keep your money around.
Exactly. Your early investments are used to grow the fund; late investment is about preservation and, primarily, keeping pace with inflation.
I'm really glad I didn't get into investing for my retirement just yet. All of our deferred compensation funds have been suffering. Fortunately, my state pension is largely unaffected.
Question, what will happen if it drops all the way to 0?
It won't.
All of our deferred compensation funds have been suffering.
I've had all of my deferred comp funds out of equities for the past few years. People thought I was a fool. The DOW has been flat for that time, so I'm glad I did. The question is when to start pumping the money into the market.
Since I happen to be doing 401(k) stuff at the moment, because of my company being acquired, let me give you an example of what kind of funds we're talking about. Also, so you know, these are really the only funds you have to choose from. If you want to take the money out of the 401(k) you can move it to an IRA at a bank or something, but that's about it. You can't take this money and buy CDs without paying the IRS 30%.
The kind of funds I'm invested in, as someone who has a long time until retirement, are the Oppenheimer Global Opportunities Fund, American Funds EuroPacific Growth Fund, Columbia Acorn Fund, etc. These are all very risky investments. Right now they are dropping like rocks. But in the long term, as in by the time I'm retired, they will almost certainly beat inflation, especially the foreign ones.
If I was getting close to retirement, I would move more and more of my money into the AIM Money market Fund or AIM U.S. Government fund. There's some risk in these funds, but it's stupidly small. The government would pretty much have to fail completely for this stuff to fall through. Yet, they do get a small amount of interest. Sometimes that interest can actually be less than a normal savings account, but to put the money in a normal savings account would require paying the IRS a lot of money prematurely.
The book for the 401(k) clearly suggests to you how much to invest in which kinds of funds depending on how long until your retirement, and your tolerance for risk. You can change your allocations on the web on a day to day basis. Changing them every day is silly, but checking every six months or so is a good idea. If you do that, your retirement is pretty much all good as long as you make a significant enough contribution to the fund, and Mad Max doesn't happen.
Right now they are dropping like rocks. But in the long term, as in by the time I'm retired, they will almost certainly beat inflation, especially the foreign ones.
I've talked to, or heard from, a lot of economists, investors, financiers, etc. in my day. Whether they were right or left leaning, academics or in the business, there was one thing that they all agreed on. In the long-term, everything in aggregate goes up, all the time. Take any long-term chart of economic progress, and you will see the same thing. For my example, I will use a historic chart of the DOW Jones Industrial Average since 1900.
Take a look at that graph and consider the short term, and you can see some disasters. The great depression itself is a pretty obvious disaster. If you bought stock in 1927, you were in bad shape for the 5-year outlook. There are other short-term disasters also. If you invested in '73, you weren't feeling so hot in '75.
But consider retirement for a moment. For someone like me, who is smart and started saving for retirement early on, we're talking about a 35+ year investment. Look on that graph and find a post-depression 30 year span of time that ends lower than it started. You won't find one. Things go up and down in the short term. Sometimes things can go way down for 5-10 years. But over longer periods of time, everything always goes up. Usually things go way up, much faster than inflation. The only way that things can happen differently is if there is a disaster on the scale of the great depression. If such a disaster happens, there's nothing you can do to protect yourself. Even the most safe investments in gold or whatnot aren't going to help you in Mad Max. We might be in for some hard times now, like they were in the '70s when you lined up for hours to get gas and drove a moped, but not investing ASAP for retirement because of our short term situation is about as stupid as you can get financially.
Actually, now is a better time to start saving for retirement. Buy low, sell high. If you happen to be unlucky, and this is the year you planned to retire, that sucks a little bit because you would have done better financially if you retired one or two years ago. However, you were smart, and in '05 you moved your funds to a money market account. Look at how much return you got on that retirement investment you started in '75! You've got millions to retire on. You've got nothing to worry about. If you really want to go out with a little more cash, work for 3 more years, and you'll be set.
GASP! Are you actually admitting that things might not be peachy-keen?!!
I don't know about you, but if we had to line up for gas, and mopeds were popular, that would actually be awesome in the book of Scott. I think the reason I seem optimistic is because I'm cool with pretty much any economic situation short of abject poverty. I'll just keep on keepin' on. And in the worst case collapse of society situation, my sense of adventure will allow me to deal with the suffering. There's really no economic situation that can fuck with me.
And, of course, even if there is a hard time, it won't last. When there starts to be a shortage of bread and circuses, people will get off their asses and shit will happen. When shit happens, the GDP goes up, and we're back in business.
I moved my 401K moneys into the "Interest Income" area about 10 months ago. While the rest of the offerings in my 401K are down 18%+ for the past year I've been making about 2%. That may not seem like much but it puts me 20% ahead of where I would be if I had left all my money in the "risky" stuff.
Soon I'll move that money back into the "riskier" offerings and clean up!
A down market is a great time to get into the market. You just need to know when to jump in.
It's just like the housing market. It sucks if you bought within the last few years but it is awesome if you spent the last few years saving to buy a house.
It's just like the housing market. It sucks if you bought within the last few years but it is awesome if you spent the last few years saving to buy a house.
Hence, we're probably going to put in some lowball bids on brand new houses that just won't sell. I expect to purchase a gigantic house for relatively little money. ^_^
Comments
2) Get a job.
3) Invest in the stock market.
4) ?????
5) Success!
2) Dow falls even lower.
3) Lose all your money!
I'm really glad I didn't get into investing for my retirement just yet. All of our deferred compensation funds have been suffering. Fortunately, my state pension is largely unaffected.
The kind of funds I'm invested in, as someone who has a long time until retirement, are the Oppenheimer Global Opportunities Fund, American Funds EuroPacific Growth Fund, Columbia Acorn Fund, etc. These are all very risky investments. Right now they are dropping like rocks. But in the long term, as in by the time I'm retired, they will almost certainly beat inflation, especially the foreign ones.
If I was getting close to retirement, I would move more and more of my money into the AIM Money market Fund or AIM U.S. Government fund. There's some risk in these funds, but it's stupidly small. The government would pretty much have to fail completely for this stuff to fall through. Yet, they do get a small amount of interest. Sometimes that interest can actually be less than a normal savings account, but to put the money in a normal savings account would require paying the IRS a lot of money prematurely.
The book for the 401(k) clearly suggests to you how much to invest in which kinds of funds depending on how long until your retirement, and your tolerance for risk. You can change your allocations on the web on a day to day basis. Changing them every day is silly, but checking every six months or so is a good idea. If you do that, your retirement is pretty much all good as long as you make a significant enough contribution to the fund, and Mad Max doesn't happen.
Take a look at that graph and consider the short term, and you can see some disasters. The great depression itself is a pretty obvious disaster. If you bought stock in 1927, you were in bad shape for the 5-year outlook. There are other short-term disasters also. If you invested in '73, you weren't feeling so hot in '75.
But consider retirement for a moment. For someone like me, who is smart and started saving for retirement early on, we're talking about a 35+ year investment. Look on that graph and find a post-depression 30 year span of time that ends lower than it started. You won't find one. Things go up and down in the short term. Sometimes things can go way down for 5-10 years. But over longer periods of time, everything always goes up. Usually things go way up, much faster than inflation. The only way that things can happen differently is if there is a disaster on the scale of the great depression. If such a disaster happens, there's nothing you can do to protect yourself. Even the most safe investments in gold or whatnot aren't going to help you in Mad Max. We might be in for some hard times now, like they were in the '70s when you lined up for hours to get gas and drove a moped, but not investing ASAP for retirement because of our short term situation is about as stupid as you can get financially.
Actually, now is a better time to start saving for retirement. Buy low, sell high. If you happen to be unlucky, and this is the year you planned to retire, that sucks a little bit because you would have done better financially if you retired one or two years ago. However, you were smart, and in '05 you moved your funds to a money market account. Look at how much return you got on that retirement investment you started in '75! You've got millions to retire on. You've got nothing to worry about. If you really want to go out with a little more cash, work for 3 more years, and you'll be set.
And, of course, even if there is a hard time, it won't last. When there starts to be a shortage of bread and circuses, people will get off their asses and shit will happen. When shit happens, the GDP goes up, and we're back in business.
Soon I'll move that money back into the "riskier" offerings and clean up!
A down market is a great time to get into the market. You just need to know when to jump in.
It's just like the housing market. It sucks if you bought within the last few years but it is awesome if you spent the last few years saving to buy a house.