Anyone made changes to their retirement accounts?

[LoveSpringsteen]

If you moved money from an investment account (stocks, funds, etc.) to a money market or cash account out of fear (or for any reason), then yes, you are locking in your losses from a temporary downturn. Moving from one fund to another similar fund, no, you are not locking in downturns.

I see. Thank you so much!

 

[MillauFr]

Pea wouldn't you be moving your money from cash into stocks at this point? I don't understand why anyone would do the opposite at this point. Cash yields are terrible and good way to lock in 8% losses per year to inflation.

 

[_19disnA]

How you invest partly relates to your age (i.e. how much longer you plan to work), your financial situation and your general view of the markets. Even if you have what you think is a secure job today, lots can happen in the future. Your company/division may get bought out by some other company who then plans to reduce headcount. You have no control over that and there is no way to know how you might be impacted.

If you think the markets will always go up 10+% annually and invested with that assumption, you are probably starting to realize that isn't reality. Markets can go up/down for a LOT or reasons that no one can predict ahead of time. Economic cycles tend to be measured in YEARS so I would avoid getting too wrapped up in the daily ups/downs of a turbulent market. Clearly, no one should be buying/selling stocks daily and will likely lose more then you gain using that approach.

If you are trying to hit it big by investing in next big thing and get drawn into risky schemes like bitcoin, there can also be BIG downsides to that approach. Regardless of the size of your investment portfolio I would work with a financial professional to plan your path forward. I would avoid specific investment advice from random people on the internet who know nothing about your particular situation.

 

[tasha99]

Not really, but I'm in a retirement group that's not typical for my age level, because I retired. I did that a long time ago, though, when I realized that I probably won't work in my field again.

 

[wabbott]

There's an online group that I frequent called Bogleheads, named for the founder of Vanguard Group, John Bogle. He was legendary in the individual investor community for his common sense advice about money. The group is very diverse, and is, IMO, the world's premier personal finance discussion group. You could call it the money counterpart of DISboards. Just about any subject or question will get a response from someone who has knowledge or experience of the issue.

https://www.bogleheads.org/forum/index.php

 

[Starport Seven-Five]

A topic like this gives me a bit of anxiety because so many people make emotional instead of logical decisions. The market starts to go down and they call their financial advisor to pull money out of the market. That move is almost guaranteed to end up in worse results than if someone left the investments alone.

We are following the investment strategy that we created years ago. The only changes to be made in reaction to market moves according to that is basic rebalancing.

 

[Ms Bibbidi]

…

 

[focusondisney]

I retired in April. My DH semi retired last year & is doing part time consulting for his former employer & is still contributing to his retirement account. We have what we consider decent retirement savings. My pension & our social security payments will cover all our day to day needs. We’ll use the retirement accounts for large expenses like home improvements or extended travel. Right now our plan is to ride things out with no significant changes since we have no immediate need to use that money.

 

[RamblingMad]

No change to my 401k. Staying the course.

 

[Frwinkley]

DH retired a year ago and I have 2 years to go (teacher). We will live off my pension and some cash savings prior to taking SS. We've left everything as is, except for some bond funds. We created a CD ladder instead. Bonds are suppose to offset the losses in stocks--that's not happening. We can withstand the losses on the stock portion and will ride it out, since we don't need the money. Having a pension is a huge blessing.

 

[Tuffcookie]

I‘ll admit to stressing out about this! I did not know what to do so I had oldest DS, who has an MBA & finance degree, look over my account. He advised me to ride it out. Any money I lose, will be less his inheritance!

TC

 

[RamblingMad]

Here's a good newsletter posted on Bogleheads:

https://oncoursefp.com/images/Vectors June 22 final.pdf

and here's the wiki:

https://www.bogleheads.org/wiki/Main_Page

 

[cvjw]

Purchased a lot of oil and gas stocks about 1.5 years ago, knowing what was about to happen. Moved a bunch of money to cash and bonds - before the downturn. We usually buy stocks during times like these - only time good stocks go on sale.

 

[CdnCarrie]

No. But good chunk of my pension will come from my pension plan and that’s not touchable.
If I was to move my RRSPs I would pay huge taxes on them.

So far my investments are up.

 

[longboard55]

I am 75 percent cash and any new buys are energy or value etfs. Still losing a lot. But stocks seem so much better priced now, should do OK when it turns around. We have had so much bad news in the last 2 1/2 years, just one thing after another. at some point things will get better

 

[Pea-n-Me]

Sounds like an optimistic crowd. Thanks for your responses.

 

[dvcgirl67]

If you moved money from an investment account (stocks, funds, etc.) to a money market or cash account out of fear (or for any reason), then yes, you are locking in your losses from a temporary downturn. Moving from one fund to another similar fund, no, you are not locking in downturns.

Yes, timing the market is difficult, and while DH and I successfully did it one time....moved out of our index funds to a MMF in early November 2007, back in on January 20th, 2009....and missed about 31% of the drop.....it's *very* stressful. Getting out is the easy part....when to get back in is a whole different matter.

We don't need to touch our invested retirement funds for another 10 years. We've built up 3 years of income in our emergency fund...1/2 of that during the pandemic, and plan to add to that over the next 2 years to get us to 5 years. We'll keep our nest egg invested because we are 10 years out from needing it, but will deploy some of the cash we've built up into the market if we see more significant losses in the market. Worst case for us...is that five years down the road at 59 and 58, we'll need to work another year or two.

I do think that this is a pretty dicey period that we're going through....and will continue to go through. The Fed is very limited in what they can do other than go full "Volcker" and really raise interest rates very quickly. They're trying to go about this is a sort of deliberate approach, but increasingly I'm reading from economists, like Larry Summers.....that won't cut it. Inflation is now embedded in wages, rent, homes.....etc, and it's not going to easily be removed. They're likely going to be more aggressive. So, the volatility will continue. If we get a 75 basis point raise, the markets will say..."yay!! Happy days are here again....the Fed gets it." But then a retailer will report that their forward guidance on margins needs to be slashed due to tumbling demand.....and the market will say...."boo....we're probably in a recession!" It's going to be that kind of summer. Having said that....I don't think that this market has bottomed.

I kind of see this time period in the way that Clark Howard talks about buying a house right now. His advice when the housing market is on the warm side has always been....buy a house right now if you plan to stay in the house for 7 years, because prices are high and while we shouldn't see a 2008 style housing debacle, we should expect slower appreciation in coming years. He's bumped that up to 10 years. I see the markets that way right now too....I'm not sure how we're going to return to some of the "pie in the sky" levels we've seen if we're removing a lot of this free money sloshing around on the Fed's balance sheet....and raising rates. The standard advice of...."don't worry about the stock market if you don't need to touch the money for 5 years" may need to be bumped out a bit.

It's going to be a very hot, very expensive and very angry summer here in the States....if that kind of news gets you down.....watch more Bravo .

 

[wabbott]

It's going to be a very hot, very expensive and very angry summer here in the States....if that kind of news gets you down.....watch more Bravo .

Better yet, turn off the TV altogether (especially financial news) and pick up a book.

 

[DisneyOma]

If I needed the money in 5 years I'd take it out. My in laws lost 25% of their college account for their grandchildren by leaving it in the market and now one of their grandchildren is ready to go to college and they now want to leave it there to recoup their loss.

That's pretty generous of your in-laws, to have saved money for their grandkids. I agree they should not touch that account until it bounces back up.

Purchased a lot of oil and gas stocks about 1.5 years ago, knowing what was about to happen. Moved a bunch of money to cash and bonds - before the downturn. We usually buy stocks during times like these - only time good stocks go on sale.

Wow, you knew Russia would invade Ukraine a year and a half ago? Man, you should have said something!

 

[Turn the Page]

For context we are in our late 30's.

We have a financial advisor who also moved some of our holdings to more stable investments. However, we have actually increased our IRA and 401K contributions. I think currently about 13% salary goes into the 401k.

He had a pension for about 15 years his company froze and rolled over into an IRA. It was rolled over spring 2020. Since that time, it had a high balance of about a 42% increase early this year and has since tanked pretty decently. But, it's still up around 12% overall since we rolled it over so I really don't think we can complain too much.

His 401k is holding relatively steady in value but he keeps making contributions so I suppose that means we're actually losing money. But we are poised to be in good financial shape once the economy rebounds.

Fingers crossed.