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What's the point of investing in a 401k? Granted, I have the opportunity to invest in treasuries and equities, and it seems like equities would be safer in a period of intense inflation, but wouldn't both fall precipitously in value?
With that said, I want to set up for my retirement, but I'm not sure what route I should take.
Should I just consider pulling my money out of my 401k in 8 years or so and putting it all in commodities like gold and silver?
Obviously, I would lose everything if I put it in treasuries because the money would be worth 35% less or more per year.
And equities have no intrinsic value, but I suppose the price could adjust in relation to inflation.
Somehow I doubt it.
So what are my options?
And if you don't believe the US will go through a period of hyperinflation, just suppose it will.
Does anyone have any rational and reasonable solutions to this? By that I mean, something you would actually do in preperation for this event or as this is occuring?
I appreciate the assistance.
Put money in 401K. Right before hyperinflation hits, roll to an IRA (change jobs if needed) and buy gold ETF's and overseas stocks.
To put my concern into perspective, my retirement savings will be wiped out, Social Security benefits will be signficantly cut, and I may or may not have a pension.
How do you survive in that type of environment? If I dedicate a considerable amount of my salary to my retirement fund, and hyperinflation occurs, how will I be any better off than those people that spend every single dollar they have whenever they get an urge?
It seems like I'll be f'd. We'll be in the same boat, but I will feel slighted because I tried to be financially conservative and I still got destroyed.
It's not so bad, I felt same way in 2008. Invest in a diversified mix. Some anti dollar stocks, some that will ride the wave of money printing that will continue, gold is always a good hedge. Taper, don't count on that. Yellen is a tried and true money printer, she is a believer in Keynesian economics.
top winners for me (NMM) (TEVA) (MA) (HFC) (DBA) round out my top winners for last two months Gold is on a rampage this year after a devastating slam of 30% I gain half back.
DISCLAIMER: I am not a stock broker and this is not a suggestion to buy any stock, it's just a discussion about stocks.
If you really think we're going to have hyperinflation, then the best thing you can do is to not make yourself dependent on the money system. Grow your own food (read about hydroponics). Learn how to fix and maintain your own stuff instead of paying other people, etc. Ideally, plan a move to a really rural area where you can do this stuff.
But if you can't or won't do that, there's really not much else you can do. If you're going to be stuck in the money system, then it makes sense to buy stocks, bonds, etc.
Watch what is actually happening and base your decisions on that. Nothing says you have to pick one or two things to invest in and then your stuck. While a few things can happen rapidly, most things are gonna unfold over several years. Just move your money where you see the opportunity to make money.
The traditional answer for inflation is buy hard assets. Property, gold, etc. But your gold can be taken. Your property taxes could get raised too high to maintain. Those things have happened.
Heck they may even force your IRA/401K accounts into treasuries, you know for your own protection. You ask who buys them, it may be you. Right now the FED buys most of them. They own about 65% or so of US debt. If borrowing money from ourselves makes no sense, then welcome to the club.
The best answer is to stay informed. Watch what is going on. Have plans in place to move money and assets as needed.
The split mentioned earlier 25% equites, bonds, cash and hard assets is a good way to gain protection from any large disaster and still get some returns. If you take that a step farther and branch those out foreign holdings. So buy some foreign equites, cash, bonds and hold some hard assets there too. You might go with 30% foreign and 70% here or even 50% 50%. As you see things happen shift those percentages around to lower your exposure to whatever bad scenario develops.
Its similar to what I do. I don't hold any bonds though. I move money from cash to equities and back as the market dictates. I have the majority overseas now (USD, SGD, NOK, CHF, gold and property). I own zero property in the US and what money I do keep here is a small amount of emergency cash a 401k and a couple brokerage accounts.
actually that mix of assets was back tested almost 35 years with foreign holdings and it added zero to the mix. .it actually confused the mix.
in times of market down turns during high inflation you had the worlds stock markets plummet the same as ours did. you had a weak dollar adding some lift but not as much as gold did.
all in all there really is nothing to be gained swapping out peces. oil and commodities were tried as well.
about the only thing that worked until rates bottomed out was using short term bonds instead of cash.
thats great but back testing doesnt account for future events. If something extraordinary happens to cause major economic turmoil such as the loss of USD as the worlds reserve currency or if our economy implodes or even if we sink into a a Japanese style stagflation then those foreign holdings will be a life saver. So if you think everything is gonna be peachy in the next 10 years then by all means pile all your wealth into 1 big basket denominated in USD. As to the scenario the OP was talking about, you can bet that holding assets in the right countries will outperform.
What if there is nuclear world war next year? Wouldn't make sense then to blow every dime you have on frivolous merrymaking today. You shouldn't behave today on extreme hypotheticals about tomorrow. I realize "inflation" is not the term people use for declining values of commodities, but gold isn't exactly immune to price declines either. There's nothing more intriniscally valuable about gold than dollars. Both have value only because people say they do.
However, this is also true with respect to debt. Debt as a % of economy is more important than debt in nominal terms. Unfortunately, that is at record levels, and I can so easily see the powers that be using hyperinflation as a way to "solve" this.
I suppose it is time to dust off "How To Prosper During The Coming Bad Years" and take its doom and gloom 1970's projections and apply them today.
Heck, the Obama Administration is "Welcome Back, Carter", with Joe Biden as Horshack and Eric Holder as Epsteen...
Debt / GDP is not at record levels.
Quote:
Originally Posted by del ragazzo
...putting my money in the equity market?
What's the point of investing in a 401k? Granted, I have the opportunity to invest in treasuries and equities, and it seems like equities would be safer in a period of intense inflation, but wouldn't both fall precipitously in value?
With that said, I want to set up for my retirement, but I'm not sure what route I should take.
Should I just consider pulling my money out of my 401k in 8 years or so and putting it all in commodities like gold and silver?
Obviously, I would lose everything if I put it in treasuries because the money would be worth 35% less or more per year.
And equities have no intrinsic value, but I suppose the price could adjust in relation to inflation.
Somehow I doubt it.
So what are my options?
And if you don't believe the US will go through a period of hyperinflation, just suppose it will.
Does anyone have any rational and reasonable solutions to this? By that I mean, something you would actually do in preperation for this event or as this is occuring?
I appreciate the assistance.
Due to demographic projections, hyperinflation is extremely improbable. Deflation is far more of a concern going forward than hyperinflation. Hyperinflation requires destabilization in the full-faith and credit of the United States, which is usually a result of war or political turmoil. Hyperinflation by massive money printing is also a fallacy, since money printing doesn't directly cause inflation unless there is a full-employment scenario, which we haven't been in for quite some time.
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