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View Full Version : With all this craziness in the economy...


Mickey Fliers
03-18-2008, 08:12 AM
what are we supposed to do about our investments? Seriously, someone help me out. I am trying to understand all this, but if I call my financial advisor, I don't know that I will get impartial advice ;) .

Are you planning to keep investing every month like nothing is happening? I guess buying in at lower rates. We currently invest monthly in mutual funds, IRA's, 401s and 529s. I am not sure if I should put a stop to this for awhile and cash out what I have or just ride it out, continue to buy monthly at the lower rates. What do you all plan to do?

Sorry if this sounds silly.

isyt
03-18-2008, 08:14 AM
You know I was actually going to post the same question. I was thinking of pulling some back out of 401k and build it in savings until the end of the year. Don't know if its the way to go but was hoping to get some opinions here.

Thanks

HeatherC
03-18-2008, 08:29 AM
I know the economy sounds very scary now, but historically those who have continued to invest through the "bad times" have always come out ahead. Continuing to make purchases when share prices are lower allows you to purchase more shares over time (dollar cost averaging). Eventually the market will go back up and you will have more shares than those who decided not to invest.

Guess I'd say....check out what Warren Buffett is doing. That is one smart man!

sk8ingmom
03-18-2008, 08:39 AM
We're going to keep buying at the same $ per month we always have - mutuals, IRAs, 529, 401k. Cheap shares now = lots more shares when the price goes back up.

Having said that, every family's situation is different. We are in our mid-30's so we have a lot of time to ride it out. We have a fix-rate mortgage on our forever house (currently a rental) and a fixed-for-four-years rental lease on the house we are living in. Also, DH & I both have jobs that are not likely to be affected by economic swings.

Change any one of those things and we might not have the same 'ride it out' strategy.

rcpae
03-18-2008, 08:47 AM
My DH and I were just discussing this last night. He was telling me that a guy at is work is looking to take a large amount of money out of his 401k to pay off his mortgage. He says he is making far less than what he is paying in interest, although I don't know if he's considered that his mortgage interest is tax deductible??

Right now we are sticking with what we have, but watching closely.

Joel110
03-18-2008, 08:55 AM
Keep investing for your goals. If you were appropriately invested 9 months ago, then your investments shouldn't need to be changed because of market timing. The average investor actually tends to do worse than the markets because they pull their money out when the markets are down and put it back in when the markets are high. In fact, a lot of research shows that women are better investors than men, because men are much more likely to tinker with their portfolios by frequent trading and trying to market time while women are more likely to put the money in their accounts and let it go. The other reason women often do better is that they don't go in full-bore (super aggressive), then when the rollercoaster hits the bottom of the hill, pull completely out. They tend to pick a moderate portfolio that grows steady without the big market swings that tend to push the emotional buttons, which create the wrong knee-jerk reactions.

A google of "women better investors" will bring up lots of info.

lovetomow
03-18-2008, 08:56 AM
:confused3 I've got about 35 years to retirement so I'm doing nothing with mine. They will go down but they will eventually come back up.

LuckyMamaInDE
03-18-2008, 09:02 AM
A well-diversified portfolio, in line with your future needs and risk tolerance, will ride out any market fluctuations.

If you don't trust your current financial advisor, may I suggest you shop around for a different one.

Signed,
The wife of a CFP who hears about all the panicky phone calls and emails.....

NCTWINSMOM
03-18-2008, 09:03 AM
[QUOTE=sk8ingmom;23863337]We're going to keep buying at the same $ per month we always have - mutuals, IRAs, 529, 401k. Cheap shares now = lots more shares when the price goes back up.

QUOTE]


Great advice! I like to think that the shares are "ON SALE", allowing us to increase are net worth. We are in are early 30's but I would do this if I were older as well. We are living longer and the price of living keeps going up...

kfeuer
03-18-2008, 09:04 AM
I'm leaving everything as is and will continue our current contributions. There's no reason to have a knee-jerk reaction with long-term investments if you're many years away from retirement.

However, I do worry for my parents. After 40+ years with the same company, he's being forced into early retirement. Luckily they shouldn't have to draw on their investments in the next few years, but it's a scary time for retirees. Luckily my father has several hobbies that could be turned into money-making enterprises if need be.

mikehn
03-18-2008, 09:20 AM
I know the economy sounds very scary now, but historically those who have continued to invest through the "bad times" have always come out ahead. Continuing to make purchases when share prices are lower allows you to purchase more shares over time (dollar cost averaging). Eventually the market will go back up and you will have more shares than those who decided not to invest.

Guess I'd say....check out what Warren Buffett is doing. That is one smart man!

Great advice. Keep investing. However, the important thing to keep in mind is, don't just stick your money into any ole investment, make sure your investments are appropriately balanced for risk.

mikehn
03-18-2008, 09:23 AM
My DH and I were just discussing this last night. He was telling me that a guy at is work is looking to take a large amount of money out of his 401k to pay off his mortgage. He says he is making far less than what he is paying in interest, although I don't know if he's considered that his mortgage interest is tax deductible??

Right now we are sticking with what we have, but watching closely.

A huge mistake to pull money out of a 401k prematurely to begin with. The ultimate mistake to use it to pay off your mortgage.

MsStinkerBelle
03-18-2008, 09:24 AM
I'm still investing. The only change I've made is to open a Roth 401K in addition to my regular 401K and increase contributions to my daughter's 529 accounts (regular and UTMA) but that was planned before the markets started going crazy. I've gone through the 2001 recession and didn't modify my investment patterns. If anything I was able to increase my portfolio value once the market recovered (I bought low and sold high).

I'm only 37 and will probably work until I'm 65 mainly because I'm a workaholic. I've been investing the maximum in a 401K since I got my first real job after grad school when I was 28. I've rode out a few crazy market cycles with more to come and no plans to pull out.

If anything, I'm scouting for 'bargains'. :thumbsup2

Chicago526
03-18-2008, 09:25 AM
what are we supposed to do about our investments? Seriously, someone help me out. I am trying to understand all this, but if I call my financial advisor, I don't know that I will get impartial advice ;) .

Are you planning to keep investing every month like nothing is happening? I guess buying in at lower rates. We currently invest monthly in mutual funds, IRA's, 401s and 529s. I am not sure if I should put a stop to this for awhile and cash out what I have or just ride it out, continue to buy monthly at the lower rates. What do you all plan to do?

Sorry if this sounds silly.

Yep! Stocks are on sale and I'm on a shoping spree! Well, I'm investing the same amount as usual, but if I had the extra money I'd be doubling down!

It IS a bit disconcerting to look at my 401k balance and see it down so much in such a short amount of time (this 1st quarter has been killer). But I'm almost 32, I'm not retireing for AT LEAST another 25 years, this will not be my only bear market, I'm sure! The only people that need to worry are those with a short investment time frame (ie, you're retireing next year or your kid starts college in the fall). Those people may need to make some changes to their investment strategy. The rest of us should go along like nothing is going wrong. Keep an eye on your investments of couse, sometimes it's better to cut your losses in certain stocks or funds, but over all, just keep on keeping on! :)

Joel110
03-18-2008, 09:30 AM
My DH and I were just discussing this last night. He was telling me that a guy at is work is looking to take a large amount of money out of his 401k to pay off his mortgage. He says he is making far less than what he is paying in interest, although I don't know if he's considered that his mortgage interest is tax deductible??

:eek: Not only the deductability of mortgage insurance, but he'll get hammered on taxes and if he's under age 59-1/2, he'll owe a 10% early withdrawal penalty. So, 40% or more of his account could likely go to the government.

mominwestlake
03-18-2008, 09:32 AM
I was wondering this same thing. If we invest $100 a month and our fund loses money each month- aren't we just throwing money away?

LeslieG
03-18-2008, 10:32 AM
I was planning on doing nothing, but then they had a guy on the news last night who said those who continue to buy stocks don't understand the dramatic thing that is happening with this economy. I know, all the news shows can make you scared of everything, but this guy caught my attention. This crisis does seem different than anything I've ever seen.

patsal
03-18-2008, 12:03 PM
I was wondering this same thing. If we invest $100 a month and our fund loses money each month- aren't we just throwing money away?

Not necessarily, see your 100 will purchase more shares when the shares are at a lower price. So if each share was going for 50 you were able to purchase 2 per month, now if the price is 25 per share you can buy four shares per month--when they go back up you will have more shares worth the new price that you paid much less for.

patsal
03-18-2008, 12:05 PM
I was planning on doing nothing, but then they had a guy on the news last night who said those who continue to buy stocks don't understand the dramatic thing that is happening with this economy. I know, all the news shows can make you scared of everything, but this guy caught my attention. This crisis does seem different than anything I've ever seen.

So what exactly did they suggest people should do? Around here the financial guys are saying eep your investment level the same, and just don't open this quarters statement--file it away and deal with it after things have stabelized.

sarahlovesmickey
03-18-2008, 12:11 PM
We were advised not to touch our 457 accounts. I don't even want them to send me a statement this quarter. I am scared!!!!!!!!!!!!!!!!!!!!!!!!!!!!

KelNottAt
03-18-2008, 12:16 PM
I'm 20 years away from needing my 401k, so I'm happy to be snatching up bargains right now.

But...the 529's have me worried. We'll need that $$ in about 2.5 years. DS's is in the final (conservative) phase of its age-based mix. So I'm hoping it can hold its value. It's losing some, but less than the market overall (as a %). Maybe/hopefully we can postpone needing it for 3+ years in order to give it more time to recover.

ETA: Those of you with younger kids shouldn't have to worry about your 529s. (Let's hope.)

mickeyfan2
03-18-2008, 12:20 PM
This is what we did and are doing. I will only know if we got it correct a year or more from now.

401K Contributing just like normal. The tax break is worth it and it will appreciate eventually. Plus there is dollar cost averaging.

A few months ago I turned some investments (about 25%) into cash. I picked and chose from the ones that I was most interested in selling eventually. They ended up in three types of accounts. A guaranteed 1 year 3% bucket, a 1% FDIC insurced account and a 3.73% (presently, it was over 5% when I moved the money) mutual fund. This is all retirement money, so we are not touching any of it.

The rest we left as it was. Some was in an energy fund (doing well), some is in index funds, some in Asia and others in Europe.

We could not move all of the money for many reasons, some we did not want to lose (cannot get back into later so needed to keep them open) and protected some.

It is all a gamble on our part and we could get it very right or very wrong. Most likely it will be somewhere in the middle.

punkin
03-18-2008, 12:53 PM
I'm 20 years away from needing my 401k, so I'm happy to be snatching up bargains right now.

But...the 529's have me worried. We'll need that $$ in about 2.5 years. DS's is in the final (conservative) phase of its age-based mix. So I'm hoping it can hold its value. It's losing some, but less than the market overall (as a %). Maybe/hopefully we can postpone needing it for 3+ years in order to give it more time to recover.

ETA: Those of you with younger kids shouldn't have to worry about your 529s. (Let's hope.)

DD15's college accounts are getting quite a beating. I guess we will be paying more out of pocket than I had hoped. DD9's accounts don't worry me as much. I think an 8 year horizon is enough for them to recover.