Retirement and the Dow Plunge

[lrb1200]

I'm 63 as I speak, so retirement is on the near horizon.

Me like maybe many of you are heavily invested in 401K's.

I watched as the bottom fell out of the Dow Jones at the end of 2007, and realized too late that I was "pot committed",
and it would be financial suicide to get out of the stock market at that point, I had no choice but to ride it out.

I watched my 401K lose 45% of it's value and could do nothing, except throw the 401K statements that came in the mail in the garbage without even opening them.

That was scary, and the stock market took many years to recover just to get back to where it was at the end of 2007.

I saw similar indications happening again in December of 2014 and dumped everything into a safe retirement fund.

I don't have seven years of time to wait for recovery again before I will need to access that account.

Every professional investment advisor I ever read says don't get out. I doubt if any of them are 63 years old.

 

[THE PILGRIM]

Irb1200-
What are you calling a 'safe retirement fund?'

 

[hoosierone]

I'm retired. The trick is to have enough cash to carry you until the market recovers. Then you don't have to sell stocks when they are down. I've been through two of these since retiring and in both instances the market did a good recovery. I believe unless you have a ton of cash you need to be in the market. Everyone has to decide for themselves how much they want to be in.

 

[lrb1200]

To The Pilgrim,

A Vangaurd mutual fund called Retirement Income. Which is basically a short term bond fund and is unaffected
by the stock market, and will historically net you about a 2%
gain on your investment.

To Hossier, if I'm tapping my 401K when the market has tanked I am selling shares at a significantly diminished rate,
and there fore diminishing the rate of market recovery that will be realized.

 

[pharmer]

Bond funds have had a great return and will continue to do so as long as interest rates approximate 0%. Joe

 

[H Richard]

Bond funds do lose money. Anything traded on the stock market can (and will) lose money. They can also gain money.

 

[LVSteve]

Bond funds do lose money. Anything traded on the stock market can (and will) lose money. They can also gain money.

My latest bond account statement has me a bit baffled. It has risen by amount X, but the taxable rise is X + $3k. Not happy.

 

[dougb1946]

You get out, you lock in the loss. Been there a couple of times. It comes back.

 

[kpap]

We have a stable fund in our 401k, I smelt something in the air and transferred my entire balance over to it. It is straight cash fund with basically no return .10 %. But I made the move when the Dow was at 17,800, and I will jump back in the stock fund when I see fit. I don't prescribe to the idea just sit back and watch the balance decline. I hope everyone has the option to move, into a truly safe place to park there money in. While the correction is happening or as I see it, the market crashing....

 

[rwsmith]

The way they tie gas prices into this.....

If they want the stocks to go back up they'd better raise oil prices a few dollars more per gallon. Do gas prices really mess up the market that much?????

Depending on the day I look I might have 100k more or less in stock. The right answer is to be in it for the long haul and not try to speculate. Do that with disposable income (which I don't have)

 

[ddixie884]

I'm glad you got out before it was a 201 K.

 

[65-2x2]

If they want the stocks to go back up they'd better raise oil prices a few dollars more per gallon. Do gas prices really mess up the market that much?????

Depending on the day I look I might have 100k more or less in stock. The right answer is to be in it for the long haul and not try to speculate. Do that with disposable income (which I don't have)

The gas prices are a symptom, not a cause. The bottom line is that China is having a learning curve on capitalist economics. they quit buying so everyone else has to quit making. Investing is a form of gambling, not every gamble pays off.

Some people are making a lot of money off the current situation; they just don't happen to be people who have to worry about retirement income.

 

[OLDSTER]

Well, being from North Dakota, I have some oil stocks; which have lost 85% of their value The good side is I have a minor part of my portfolio in them. At age 68, I'm not counting on them recovering during my life time unless I live a LONG time. So I'll keep them for my kids. But on subject, our investment adviser got us into REITs a few years back, and they are holding their own.

 

[Lockport Redhawk]

ATT pays a 5% dividend and stays in the $31-$34 range. Get in at the low range and hold it.

 

[16thVACav]

When stocks are down, it's the same as a sale, a buying opportunity.

If I were in your shoes, I'd take half of the money you have in the short term bond fund and invest 40% in an S&P stock index fund, 40% in a stock index fund that covers the rest of the US market, and 20% in an international stock fund with a decent history.

 

[ladder13]

An interesting opinion piece on the Saudi's role in all of this.


Articles: The End of Saudi Arabia?

 

[Huskerguy]

Well, being from North Dakota, I have some oil stocks; which have lost 85% of their value The good side is I have a minor part of my portfolio in them. At age 68, I'm not counting on them recovering during my life time unless I live a LONG time. So I'll keep them for my kids. But on subject, our investment adviser got us into REITs a few years back, and they are holding their own.

Everyone has their own concerns and tolerances. I was a buy and hold, dollar cost average person until a few years ago as I began to creep towards retirement age. I will be 62 in a few days. I taught personal finance to HS kids and always used the rule of 72 and at my age I am running out of time so I have pulled back to being conservative. I first consolidated most everything to TD Ameritrade. It could be Swab or anyone else, but just makes it easier to manage for me. I am not a fan of this administration so I have been in some bond funds (yes they lose money) and some REITS. I don't know if I would get back into REITS after I sell these. They took a huge beating in 08 and have not fully returned. Not all REITS are created equal. There are apartment REITS, school dorm REITS, shopping centers, you name it. They really tie up your money as well. There is talk that the money will now begin to flow into real estate which would make REITS a great deal, we will see on that. I guess there is not much else to do with the money right now.

As I wrote in another thread, I would look at ETF's which area much like mutual funds that trade like stocks. Put a floor under them and sell if they begin to lose too much for your tolerance.

These big brokerage places have CD deals they send out as well. You can get some for over 2.5% which is not great but better than current returns on money markets.

A lot of it has to do with how much you need your money? I am blessed in that I have a teaching pension that I can mostly get by on. I hope to not have to take money out of my IRA's until later in life, when I want to give something to the kids or make a big purchase. So I am more concerned about keeping my investment than making a return on it.

There is way to much volatility in the markets right now. It seems like something pretty small can send this over the edge and I mean a big mess will ensue. It is likely that nothing in electronic holdings will be of value. I have started investing in real estate, like rental property. I am a bit too old, would have worked better younger but it done right, you have little risk and build some nice equity.

 

[vytoland]

investments are the same as any thing............there are sunny warm days and cold ones with rain..................

you need to honestly determine your risk/reward comfort level.............

 

[HOUSTON RICK]

"Professional Stockbrokers" are like ancient priests, they are good jobs to get if you can't do anything else, and they have to convince their marks that they can auger knowledge from omens. Brokers have one task, to turn your money into their money. Any benefit that the client receives is pure luck and chance. You might as well have your divorce attorney or gardener pick stocks for you.

 

[finesse_r]

The word plunge should never be used except to describe women's neck line, and the best way to free up a clogged toilet.