401k advice needed!

[mefordis]

I have one IRA and one 401k account. I have been self employed for the last 3 years and unable to put anything into either of them, so I am not taking advantage of dollar cost averaging. I am just watching the two accounts decrease in value. Should I move all of the money to safe money market funds or keep them in the mutual funds they are now in?

I wanted to take a withdrawl with penalty about a month ago. I should have done that because one IRA has lost 10k anyway in a matter of weeks!

 

[Christine]

Everything I've read says that you should not pull out your money at this time. Doing so would be "locking in your loss." Makes sense but it is hard to watch. I am leaving mine and waiting for the markets to stabilize so maybe it will increase a bit.

 

[sandy6879]

If you don't need it, leave it alone. And don't look at your statements in the meantime. Seriously, in any ten year historical period, there has always been a gain, but to know when the gain is going to happen is impossible.

I refuse to log in and check my 401k and my IRA statements are staying unopened. Psychologically, it's a lot easier that way.

 

[SeeVee]

Think of your 401k as the Rockin' Roller Coaster right now. It may be a scary ride, maybe even terrifying, but as long as you stayed buckled in to the end, you wont get hurt. You will only get hurt if you jump off in the middle of the ride.

 

[mefordis]

Leave it in securities even though I'm not contributing right now?

 

[sandy6879]

If you sell, you're selling low. It makes no sense to sell the securities low and move them into a money market where they have no chance of growing. The securities will more than likely come back, depending what you invested in. There is a definite loss if you put it into money market funds now.

 

[tinatark]

Yep. leave it.. also, if you look at the principle you've invested, are you still up? We have lost a TON of $$, but we're still up over what we've put in, in real dollars.

 

[Golf4food]

Plus if you withdraw you automatically lose another large chunk in taxes and fees - on top of your current market losses.

Do you have other less volatile fund options within your 401K/IRA that you could transfer money to (keep it in the 401K/IRA, just reallocate your funds into safer options). For instance, our company 401K has about 7 different options ranging from very low risk (and very little growth) up to Russell2000 Index small-cap risky stocks.

 

[golfgal]

The only time you really have a loss or gain in any account is when you cash it in-the rest of the time it is all numbers on paper. If you cash it in now, you lose. If you wait another 10,20,40 years you win because it WILL go back up again!!

 

[golfgal]

How old are you--that makes a LITTLE difference too.