I religiously put $1025 of my pre-tax income into my 401(k) each month. My employer contributes an additional 6%.
As of April 23, 2010, I had $190,000 squirreled away for my sunset years.
Today, I have $169,000.
Welcome to the roller coaster.
Ideally, I should close my eyes, continue the contributions, and see where I stand in 8 years when I plan to retire.
Realistically, I keep peeking! And worrying!
This is, no doubt, a function of my age. If I were in my twenties, thirties, heck--even my forties, I could be more sanguine about the upheavals in the stock market. But this is my immediate future we're playing with. And it's scary!
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8 comments:
Get ready for a sharp downslide. Europe is in the tank and USA isn't far behind.
Most economists say 'cash' is where investors should be. Cash & gold.
Go figure.
*patpatpat*
ZERO economists say that gold is where you should be. That's ridiculous.
What they do say is that you should keep with a risk-adjusted diversified portfolio appropriate for you age and target retirement date (keeping in mind that you may not have control over the date on which you retire). By diversified, that means some %index stock funds, some %bonds. If you've got those, then maybe some REITs or real estate, which you've got already.
Economists also say that you should keep any money you want to have within 5 years in "cash" otherwise keep putting in money in stocks and bonds every month for longer terms savings just like you're doing because nobody can predict what things are going to be like in the short term or long term.
I don't like nor trust financial advice from anonymous commentors. Do you? Just google 'economists advise gold investments' and see what comes up. Like this link:
http://www.resourceinvestor.com/News/2010/5/Pages/Why-More-Investors-Like-Gold.aspx
The global paper currency is being destroyed and devalued. Already there's talk of a new world global currency. If that happens, what will your USD be worth? Think it won't? Ha.
"Here’s one way to look at currency destruction -- 10 years ago this week, $1,000 bought nearly four ounces of gold, and today $1,000 won’t even get you a single ounce. Gold is money, so when you look at the gold-dollar exchange rate, the dollar’s value has fallen by a startling 78 percent just in the past decade."
USD is down 78%. Buy a few gold coins and hedge your bets for your future. Buying anything on Wall Street and hoping you'll have money when you retire is insanity. You'd be better off playing your state lottery.
An allocation of 100 percent in equities for someone that intends to retire in 8 years is too risky. You need to diversify. Your rental property offers some balance, but a significant amount of the remainder should be in more secure places. And right now, that does not mean bonds and certainly not bond funds. It means cash and cash equivalents.
Grace,
Unlike the others who left advisory comments, I have no words of wisdom. I feel for you as the market continues to yo-yo, but one thing is certain: regardless of the fluctuation, your nest egg will be bigger if you continue to invest than if you don't. And although your 401k is not a great match, it is still free money.
Well, I suppose I ended up giving advise after all.:)
Having a name and a blog doesn't make you any less anonymous.
Re: economists-- I am a PhD economist and we all think the people urging investing in gold are crackpots or opportunists. (Hence the massive advertising on Fox News. Love the Glenn Beck ads.)
Personally, if I were going to trust someone random on the internet I would go with Walter Updegrave-- he gives great retirement advice. And no, he does not recommend gold. http://moremoney.blogs.money.cnn.com/2008/11/05/buying-gold-as-a-safe-haven/
I still say investing in gold for stability is ridiculous. If you want to speculate (on the people who get their investment advice from Glenn Beck), go right ahead. It is by no means a safe investment and is very likely overvalued at this point.
MasterPo had been 100% in equities.
FWIW, a couple of months ago MasterPo moved half his 401k to cash. Then two weeks ago MasterPo moved half of the remaining half out of equities into cash. Thus leaving about 25% in equities (plus new money going in).
On the non-retirement side MasterPo has begun selling some equity mutual funds and going short term gov bonds instead.
Anon w/PhD in Economics:
"Crackpots" based on what? If you really have a PhD then you should know that gold historically has value regardless of what happens to a nation. Currencies and nations come and go, gold survives.
ps- You blame people for being "opportunists" and yet you (claim to be) an Economist?!
Proof than an eduction doesn't always mean someone is smart.
Crackpots who are all (to quote Dick Cheney), "Henny Penny the sky is falling." If you really truly believe that the US is going to collapse and/or hyperinflate you would be much better off going off the grid, learning to garden, and stockpiling food, seeds, guns, and other essentials. Getting your bunker ready will be a lot more valuable than investing in gold.
Gold is for speculation with excess money. Not for safe investing for retirement. You can't eat it and if the US collapses it will be difficult to find a safe haven anywhere on earth.
You're also going to need those guns if you're keeping so much gold in your house. Gold's not going to do you a whole lot of good when you're dead. And, if the US completely collapses, good luck getting it out of a bank.
The terrible thing about education is that it can teach you to think things through to their logical conclusions. It's horrible.
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