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Old 11-20-2008, 08:18 AM
 
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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.
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Old 11-20-2008, 08:26 AM
 
Location: Wouldn't you like to know?
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This market will test your risk tolerance that's for sure. Sounds like you need some reassurance....



You say you are very young. Lets assume your 25 yrs old for discussion.

I assume your goal is to start drawing down 401k at around 60 yrs of age, correct?

That gives you 35 years.

If you can market time and know when the exact bottom is w/100% certainty, then pull your money out and reinvest it that day. People here sometimes get lucky and boast about market timing calls when successful, however they never mention the loser calls they make. Prediciting the market w/100% certainty is a losers game.

Otherwise, stick w/your original plan and check back w/us 35 years from now. I'll bet that you'll have a nice nest egg in [b]2043 if you tailor your portfolio to your risk tolerance.

Good luck.
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Old 11-20-2008, 08:52 AM
 
28,461 posts, read 78,320,467 times
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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!
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Old 11-20-2008, 08:56 AM
 
Location: Wouldn't you like to know?
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Quote:
Originally Posted by chet everett View Post

ANY PERSON WHO TAKES MONEY OUT OF A 401K BECAUSE "THE MARKET IS DOWN" IS A FOOL!
They are not "fools" sir. Many people are scared and have a legitimate beef on what they should do w/their portfolio. This drop has tested EVERYONE's risk tolerance.


IF you have a long term time horizon, you should be in equities now, but if you are close to retirement, you don't have the luxury of time in alot of cases to regain much of the losses IMO.
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Old 11-20-2008, 09:09 AM
 
12,869 posts, read 13,960,459 times
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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!
tell that to the enron employees......
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Old 11-20-2008, 09:19 AM
 
Location: Wouldn't you like to know?
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Quote:
Originally Posted by floridasandy View Post
tell that to the enron employees......
Andy, you are arguing apples and oranges.

Its is extremely risky to have more than 5-10% of one's 401k in company stock.

The former enron employees did not have a gun to their head to fully invest in Enron stock. If they did, that was extremely foolish on their part.


Lousy comparision on your part.
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Old 11-20-2008, 09:23 AM
 
630 posts, read 1,838,884 times
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Frankly, I think 401k's are way over rated IMO. There are times I wonder if the whole idea of investing in the 401k overshadowed the responsibility to simply save money in a good old savings account as well that can be dipped into during emergency situations. I'm not saying 401k's don't have their place in a savings plan but I wonder how many people stopped saving money along with the 401k banking on the fact that the 401k would ALWAYS be a good investment. I'm a great saver and my savings account is tenfold beyond my 401k with or without employer incentives --- and nobody can tell me I can't touch that money without penalty.

It makes more sense to me to build up an emergency cash fund first.

Last edited by kwalk65; 11-20-2008 at 09:25 AM.. Reason: spelling
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Old 11-20-2008, 09:28 AM
 
Location: Wouldn't you like to know?
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Quote:
Originally Posted by kwalk65 View Post
Frankly, I think 401k's are way over rated IMO. There are times I wonder if the whole idea of investing in the 401k overshadowed the responsibility to simply save money in a good old savings account as well that can be dipped into during emergency situations. I'm not saying 401k's don't have their place in a savings plan but I wonder how many people stopped saving money along with the 401k banking on the fact that the 401k would ALWAYS be a good investment. I'm a great saver and my savings account is tenfold beyond my 401k with or without employer incentives --- and nobody can tell me I can't touch that money without penalty.

It makes more sense to me to build up an emergency cash fund first.
If you are a good saver, you can do both (401k & taxable savings) concurrently.

I agree an emerg. fund should be seperate and readily available. But to me that's a different issue.

I was talking about over 30 years or so when your ready to retire, where would have greater compounded interest, a CD or a mix of equities/bonds? My guess is the latter.
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Old 11-20-2008, 09:38 AM
 
Location: The Pacific NW.
879 posts, read 1,859,050 times
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Quote:
Originally Posted by CouponJack View Post
They are not "fools" sir. Many people are scared and have a legitimate beef on what they should do w/their portfolio.
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.

Quote:
IF you have a long term time horizon, you should be in equities now, but if you are close to retirement, you don't have the luxury of time in alot of cases to regain much of the losses IMO.
If you're close to retirement, your 401k allocation shouldn't have been heavy in stocks to begin with.

Quote:
Originally Posted by floridasandy
tell that to the enron employees......
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.
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Old 11-20-2008, 09:57 AM
 
5,648 posts, read 9,259,551 times
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I think Mr. SCREAMING up there sounds more like an almost out of work security industry guy.

LongArm,

I have a feeling you are a mutual fund kind of guy. 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. Who would have thought a 20% drop turned into a 40% decline?

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.

Anyway, we might disagree, but you always have my respect sir.

Last edited by davidt1; 11-20-2008 at 10:11 AM..
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