401k AND Economic crisis...

[Phillycore]

With the current state of the economy I'm curious to what everyone is doing with their 401k's....

I don't mean specifically or anything like that, just generally.
As I am in my mid 30's (35) and don't figure to be using any of what I am putting into my 401k for at least 25-35 years I'm seriously considering bumping up my contribution amount from it's current 8% to 10% to take advantage of the falling prices. Is this bad thinking on my part? If I was older and closer to retirement I'd be in a panic right about now, but being as I'm going nowhere for quite some time.. I'm figuring it's probably my best bet to jump on the crashing prices and hope for some sort of long term turnaround...

Thoughts..

 

[deadheadskier]

...enter Moe Ghoul in 3, 2, 1......:lol:

I think for younger people like you and me, the best thing to do is not panic and look at this as an opportunity. Older folks on fixed incomes I am very much concerned about.

 

[andyzee]

Good question. I'm older and closer to retiremnet, 17 years to go, and considered the same thing. But the market is so fragile right now, it's a scary thing to do. I'm seeing more and more companies go out of business.

 

[drjeff]

I'm similar age (37 in a few weeks) and will admit to bailing on my funds(my office has a "old school" traditional profit sharing plan with an option 401k) in the market now and pulling out of the market and into fixed securities. While my plan would have me not needing the money for another 20 to maybe 25 years if all goes well. The current wild volatility of the market and the paperloss of my account this year so far has me feeling alot more comfortable with my money earning a bit over 1 and a quarter percent at this moment.

I'll probably keep atleast most of my $$ in this relatively safe set up atleast through election day, but probably longer than that, until the financial markets get to a level of volatility that I feel more comfortable with. Plus, the way that the plan for my office, and my other investments work, a few strikes of the keyboard and a couple of mouse clicks and I can quickly be back in if I so choose.

If I had the time to REALLY stay ontop of things, I'd still likely be in the markets at maybe a 50% level right now. The problem IMHO, is that while there are some really good bargains out there right now, my gut is telling me that there's a decent chance that these "bargain" prices right now may very well seem high a few months from now

 

[hammer]

This is the time when I hope dollar cost averaging helps...realistically, I don't see myself truly retiring before age 70 anyway. :--(

 

[ctenidae]

Either sit tight and fully fund, or go to cash/fixed income and be ready to jump back in. Market timing is hard, and dangerous- missing the best 10 days over the past 30 years will give you a return similar to Treasuries. You want to risk missing those days?

Stay in the market, stay calm, make sure you have sufficient cash to hold out.

 

[WJenness]

27yo here.... I don't like the fact that it's declined so much, but I'm looking at it as an opportunity.

I'm not planning on touching that money for quite a while anyway, so I'm confident that in the long run it'll be fine.

-w

 

[BeanoNYC]

Good question. I'm older...

You can say that again.

 

[Moe Ghoul]

Gold = 918, pretty much says it all and it's gonna go much higher in the next few years. The Mint is having shortages and coins/bars are selling above spot prices right now. I don't have a 401K, I use IRA's and SEP's so I can put anything in it. 401K's usually have some restrictions or limited selections of vehicles available from what I've read. If you are in a money market, be certain it is in Fed Treasuries MM and not backed with some derivative BS. If you took a beating lately, and you have a 20+ yr. horizon, you might as well bite the bullet and sweat it out, I wouldn't be DCAing into this chaos. Cash is relatively safe, but inflation is gonna chew it up over time. And the Fed will be forced to cut rates to 0, they woulda cut a full point, but there were only 2 bullets left in the chamber. The economy is shrinking, that's the underlying "crisis" unfolding, which means earnings are gonna suck. AA had piss poor earnings.

 

[RootDKJ]

For the most part, there's not much I can do. I change the distribution of incoming money to be slightly more balanced but that's not going to really do that much for me as I'll max out in the next paycheck. I've also maxed out my IRA for the year. It seemed like a good idea since prices are so low.

 

[Glenn]

Almost 32 here...so I've got time to make it up.

I'm sitting tight with my 401k. I'm most heavily invested in stock based mutual funds. I was down 13% for the year weeks ago...I refuse to check fidelity.com currently...LOL!

I'm sitting tight. As mentioned, dollar cost averaging will pay out in the end. I'm not one to move funds around too much. Day trading is tough, it's even harder with a retirement account. IMHO, if you're in something now...stick with it. I see nothing wring with increasing your contribution either. Again, it's so hard to time the market, could it fall more? Will it start going up? Who knows. But even if you do increase your contributions, and the markets to fall, they will eventually go up again. And you'll still be ahead of the game: You may not have bought at the "bottom", but you did technically buy low.

One of the functions of my job is the company 401k account. It's certainly on a lot of peoples' minds these days.

 

[drjeff]

I figure that i'll base my jump back in on when we can go a week without the Fed and/or some major countries/Union's central bank having to make a quick injection of a few billion dollars into the market to try and provide some stability to the market!

Right now big picture it seems like the central banks are trying to re-attach a severed limb with a piece of scotch tape! Long term, the "patient" will live if for no other reason than the presence of an underlying strong heartbeat, but along the way because of very limited "blood supply" a limb or two might end up being amputated to keep them alive.

 

[Marc]

I'm selling everything right now. Obviously it's the smart move.

 

[RootDKJ]

Almost 32 here...so I've got time to make it up.

I'm sitting tight with my 401k. I'm most heavily invested in stock based mutual funds. I was down 13% for the year weeks ago...I refuse to check fidelity.com currently...LOL!

I know exactly how much I'm down YTD and it's not pretty

 

[drjeff]

I know exactly how much I'm down YTD and it's not pretty

Same thing with me. I hit my "magic number" this week where I told myself that I'd make the move from conservatively in to full treasuries, until I feel a bit more comfortable with the volatility/risk of the market.

I bet that's there's a heck of alot of fund managers/financial planners out there right now that wished that they had access to a DEA number so they could dispense some anti-depressants/anti-anxiety drugs to their clients recently.

 

[Glenn]

It's certainly rough for the ol' 401k's right now. I keep telling myself I'm young enough to ride it out. One thing I will learn from this: As I get closer to retirement, it's going to be damn important to start shifting the investment mix to more conservative investment options. It's amazing the turn we've seen in the market over the last year and half or so. I feel bad for those who are getting close to retirement, but still have an agressive mix; they may not have time to make up for the losses. I don't want to be in that possition when the time comes.

 

[Greg]

I'm 35. Sitting tight, but the situation does remind me to start paying close attention in about 5 years. If we haven't recovered by then, it might be time to consider shifting things around. I took a big hit in the late 90's, of course the balance was paltry back then. Anyway, while my contributions don't seems to be altering the bottom line all that much lately, the share quantity is rising. I'm hoping when it recovers it performs well. Same for my daughters' college savings accounts.

 

[GrilledSteezeSandwich]

I don't have a 401k and never will...I hate the fact that I'd be penalized if I withdrew money before I'm 60 years old..I only put my money in short term ( less than 2 years) bank CDs..I have a 9 month CD up on the 18th that I get 4.6% on and my next one will probably be about 4%..Seriously it's sad to say but my retirement fund is my Dads company and my future inheritance from my Grandma and parents..

 

[GrilledSteezeSandwich]

Good question. I'm older and closer to retiremnet, 17 years to go, and considered the same thing. But the market is so fragile right now, it's a scary thing to do. I'm seeing more and more companies go out of business.

Yikes 17 more years for you...da damn..:dunce::dunce::dunce: Aren't you in your 50s:argue:

 

[RootDKJ]

I don't have a 401k and never will...I hate the fact that I'd be penalized if I withdrew money before I'm 60 years old..I only put my money in short term ( less than 2 years) bank CDs..I have a 9 month CD up on the 18th that I get 4.6% on and my next one will probably be about 4%..Seriously it's sad to say but my retirement fund is my Dads company and my future inheritance from my Grandma and parents..

Do you do your yearly IRA's?