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Old 11-20-2008, 09:59 AM
 
Location: Apple Valley Calif
7,474 posts, read 21,650,748 times
Reputation: 5651

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Quote:
Originally Posted by chet everett View Post
This is harsh, but it needs to be said:

ANY PERSON WITH ANY KIND OF INCOME WHO IS NOT PUTTING MONEY INTO AN 401K/IRA IS A TOTAL MORON!

ANY PERSON WHO WORKS IN A JOB WHERE THEY MATCH YOUR 401K AND IS NOT CONTRIBUTING IS AN IDIOT!

ANY PERSON WHO TAKES MONEY OUT OF A 401K BECAUSE "THE MARKET IS DOWN" IS A FOOL!
I second that...!
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Old 11-20-2008, 10:09 AM
 
Location: Apple Valley Calif
7,474 posts, read 21,650,748 times
Reputation: 5651
The time to be investing heavily in 401k's is right now while the prices are down. The market will come back and the investers will be the winners, not those who cashed out. Especially if you have many years left to work..
I'm retired and probably lost over $100k in the last few months. Not to worry, it will be back, and if it doesn't come back, then it's because the USA no longer exists, and in that case, it doesn't matter where your money is.
I haven't had to drw on my 401k, and probably never will, so I consider it a ong term investment that the kid will take over...
Have a little faith in our country...
If all of the people who were jumping out of windows in the market crash in 1929 would have held on to those stocks, they would be fabulously wealthy today. Very old and dead, but very wealthy. The market always comes back. If it doesn't, we're all done for anyway...
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Old 11-20-2008, 10:11 AM
 
Location: Visitation between Wal-Mart & Home Depot
8,307 posts, read 36,932,908 times
Reputation: 7145
Quote:
Originally Posted by BuyEliminator View Post
I've been following this board for a few months now as we watch the economy sink. I'm young and have been contributing to my 401k for five years. With the increasing discussions of the stocks crashing, I'm wondering if I should pull my money out? And if so, where I should put it. I don't have much, 20K or so (probably less than that in the past couple weeks).

I did stop 401k deposits a month ago to save more for money on hand. My company matches at 6%, however, with the economy I doubt my employment is the most stable at this point.

I don't want to lose it all. Things are already very tight in the household.
Pulling money out of your 401K before it matures is a poor idea in the best of times, getting out on a downslide compounds the problem considerably.

As a young guy, you have a lot of time before you retire and any time is a good time to be investing money in your retirement. This market will recover.

The people who are really hurting are those who have been saving their entire lives and planned to retire in five years or so. They have seen their retirement funds greatly diminished in the matter of a few months and that retirement date is steadily marching further into the future.

You're not in that boat. Hold on to your job like a madman and sock away whatever you can. Anything you have in stocks only has a real value twice: When you buy it and when you sell it. If you pull out now, you will have made your 20% loss real. If you keep buying and keep saving, five years (or less) will see that loss erased and reversed. Young people aren't going to be hurt as badly as old people unless they lose their jobs and can't divert money to savings.

Don't panic and do something silly. Silliness in the midst of panic is always a bad recipe.

Anyway, at this point you can't make a move that wouldn't be selling low and buying high.
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Old 11-20-2008, 11:20 AM
 
Location: Wouldn't you like to know?
9,115 posts, read 16,538,491 times
Reputation: 3713
Quote:
Originally Posted by LongArm View Post
True, not fools, just uneducated. If you're young, pulling money out of a 401k now, after a huge drop, IS a foolISH thing to do, though, IMO.


If you're close to retirement, your 401k allocation shouldn't have been heavy in stocks to begin with.


I was an Enron employee for a time. Some of us lost a big chunk of our 401ks because matching contributions were made with Enron stock--we had no choice on that. THAT was the problem, not 401ks in general. Some employees allocated even more than THAT into Enron stock. Those employees--some of them friends of mine--got what they were asking for, frankly.
I agree w/you on all parts. I am invested heavily in equities, however I'm young and the volatility over the past 2 months definitely showed me what my risk tolerance was. I could only stomach a 40% total drop on my portfolio.

Some people have ridden this out from the beginning. I personally didn't have the set to do that.


In regards to the Enron stock, if they forced you to match w/it, that's the only amount of stock I would've had. If you had more than that, then your foolish, I agree
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Old 11-20-2008, 01:38 PM
 
Location: The Pacific NW.
879 posts, read 1,862,283 times
Reputation: 489
Quote:
Originally Posted by davidt1 View Post
LongArm, I have a feeling you are a mutual fund kind of guy.
Haha, no, actually, I consider myself a totally objective "investing enthusiast." I also trade for a living--and no, NOT mutual funds.

Quote:
If I am not mistaken as far back as a year ago some people were telling other people not to drop out of 401ks because of the declines.
They SHOUDN'T have dropped out of their 401ks, particularly if they were getting a company match. If they were concerned about a market decline or just had a low tolerance for risk/volatility in general, they should have simply CHANGED THEIR ALLOCATION to a more conservative one. For some reason, many people don't seem to realize that 401k plans offer money market funds, stable value funds and bond funds in addition to stock funds.

Quote:
Who would have thought a 20% drop turned into a 40% decline?
Obviously, a 40% decline is not a good thing, but...I would bet that most 401k participants who are intelligently, somewhat conservatively allocated (perhaps even if they're NOT), who put money in regularly up to, during and after this fall, will be just fine 20 years from now, especially if they're getting a match.

Quote:
I must admit that I didn't know much about the Enron thing, especially the stock matching thing. So that was the problem for Enron, not the 401ks. Today's down 401ks don't seem have that Enron's stock matching problem. I guess they just have the plain 401k problems.
Actually, I'd say they're having "stock market problems," not 401k problems. If you're looking for a problem with 401ks, I would say that investor education (or lack thereof) is the biggest problem.

Quote:
Anyway, we might disagree, but you always have my respect sir.
And you mine.
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Old 11-20-2008, 02:13 PM
 
5,670 posts, read 9,302,223 times
Reputation: 8191
"They SHOUDN'T have dropped out of their 401ks, particularly if they were getting a company match. If they were concerned about a market decline or just had a low tolerance for risk/volatility in general, they should have simply CHANGED THEIR ALLOCATION to a more conservative one. For some reason, many people don't seem to realize that 401k plans offer money market funds, stable value funds and bond funds in addition to stock funds."

Correct!

I should have worded my response differently. Drop out wasn't what I meant to say. Asset allocation would have been a better word.

A while back I recommended to another poster that he/she should contribute the minimum to get the company match and learn to invest in his/her own. I just want to clarify the second part of my recommendation. I firmly believe that skilled individual investors can do better than the so-called professionals who manage people's mutual funds. However, trading or investing, like everything else, is not for everyone. Some people are good at it. Some people are not.
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Old 11-20-2008, 02:20 PM
 
Location: Yootó
1,305 posts, read 3,424,757 times
Reputation: 809
Quote:
Originally Posted by jimboburnsy View Post
Pulling money out of your 401K before it matures is a poor idea in the best of times, getting out on a downslide compounds the problem considerably.

As a young guy, you have a lot of time before you retire and any time is a good time to be investing money in your retirement. This market will recover.

The people who are really hurting are those who have been saving their entire lives and planned to retire in five years or so. They have seen their retirement funds greatly diminished in the matter of a few months and that retirement date is steadily marching further into the future.

You're not in that boat. Hold on to your job like a madman and sock away whatever you can. Anything you have in stocks only has a real value twice: When you buy it and when you sell it. If you pull out now, you will have made your 20% loss real. If you keep buying and keep saving, five years (or less) will see that loss erased and reversed. Young people aren't going to be hurt as badly as old people unless they lose their jobs and can't divert money to savings.

Don't panic and do something silly. Silliness in the midst of panic is always a bad recipe.

Anyway, at this point you can't make a move that wouldn't be selling low and buying high.
Good advice.

If you didn't get out early, don't do it now, you will only lose more money. Just stop looking at it for now.
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