Retirement accounts....losing losing losing?

[TheRatPack]

Okay....so for a few years now we've been socking away at the retirement account....well quite a few years LOL It got up there to an amount we were comfortable with, but then the economy took a dive and so did our retirement account. I opened up the statement today and WOW....was that depressing. All the money that was taken from checks in June, and the companies match are GONE as is another 50.00 or so. So the money that was deducted from checks for the retirement account was pretty much just tossed, and almost broke even from the losses this month....how depressing.

We are invested with a good company....and have a safe option as well as a riskier one since we're younger....but this is just getting to be a bit much. I was reading an article on it and saw that a lot of people are having this problem and wonder if they account will just zero out soon...and was kind of comforted by the fact that I had found more people with the same concern and they were all sticking it out, saying that it would recover in a couple of years and that we'd have bought a lot of cheap stock by then LOL Then I looked at the date of the article and it was 2008 Ummm, if we're still losing that much money every month....and it's been 2 years, I think it's definitely time to evaluate where our money is and change some things. We can not afford to keep losing that much every month....it's crazy!

So what seems to be the safest route in this situation? Put it in to something more stable, even though the thought of selling low is crud too....LOL I guess I'm just trying to weigh our options....I do not want to be sitting here 2 years from now with a zero account balance, and keep losing all that money each month that could go towards other savings. But we've never had to deal with any kind of rollover or account closure...etc. And if we stop contributing at all, it's going to sink awfully fast.

 

[a1tinkfans]

From your lips to HIS ears, good luck, many have lost lots and some near ALL!
Good Luck!

Heres hoping the economy can recover, but its gonna be a Long time based on whats still happening

 

[bridget]

How far are you from retirement? When you say you are invested in a good company what does that mean? Is all your money in one stock?

You should be accumulating more shares. Have you compared your statements with 2008, to see how many more shares you have?

I'm not sure everyone's investments are suffering right now...Sure the market is still down about 30% from the high in 2008, however, if you've been contributing every month, you would have been buying more shares when it was at the lows, and the market has been coming back.

 

[StitchBuddy]

I hear you! We are in the same boat. We have decided to keep contributing to my husbands 401K, it is doing okay, but we are not contributing to our Roth IRA's. Instead we are going to put that money towards paying off our home early. At least we will see something for our effort.

 

[lh193]

Here's the mistake that most people make. When the market is down, they look at their statements and go "oh no, I've lost so much money" Let's look at two scenarios. Person A sells right away because they don't want to lose any more money and "throw good money after bad". Person A has definitely lost $.

Person B hangs in there and is buying more shares for less money versus before. When the stock market recovers, those paper losses will have turned back positive.

When the market recovers (even slightly), person A says "wow, now's the time to get back in". But when you think about it, person A has done the opposite of most investment gurus. You want to buy low and sell high, but they've sold low and now want to buy when it's high.

Retirement accounts that you contribute to every paycheck have a way of balancing what you are buying (dollar cost averaging). Because you contribute the same amount every time, when the market is high, you are buying less shares. When the market is low, you are buying more shares. This is really the ideal because it's next to impossible to time when prices will be high or low.

If you are years away from needing the money, I would keep sticking with it.

 

[john1928]

I hear where you're coming from as it always stinks to see that you've "lost" money. Periodically checking on and updating your investment plans as needed makes sense, but if you have a long time until retirement and you're someone who's bothered by large swings you may want to only do that checking quarterly or even yearly.

As you build up your balance it's pretty common to see swings that will be larger than your contribution for the month, heck larger than your salary for the month (or even your salary for the year when we're talking %20+/- swings) on a regular basis.

That can hurt a lot if you're near retirement (why they advise moving to more conservative investment mixes as you age), but if you're in your 30's or 40's then the prices of the stocks you'll be buying for the next 20-40 years going down is probably a good thing in the long run...

 

[kydisneyfans]

Here's the mistake that most people make. When the market is down, they look at their statements and go "oh no, I've lost so much money" Let's look at two scenarios. Person A sells right away because they don't want to lose any more money and "throw good money after bad". Person A has definitely lost $.

Person B hangs in there and is buying more shares for less money versus before. When the stock market recovers, those paper losses will have turned back positive.

When the market recovers (even slightly), person A says "wow, now's the time to get back in". But when you think about it, person A has done the opposite of most investment gurus. You want to buy low and sell high, but they've sold low and now want to buy when it's high.

Retirement accounts that you contribute to every paycheck have a way of balancing what you are buying (dollar cost averaging). Because you contribute the same amount every time, when the market is high, you are buying less shares. When the market is low, you are buying more shares. This is really the ideal because it's next to impossible to time when prices will be high or low.

If you are years away from needing the money, I would keep sticking with it.

You saved me alot of typing. The Dow had gone back to the 11000 range, then dipped 10-12% over the past month. Diversify investments, and keep buying if you are younger.

 

[Swimalie]

You saved me alot of typing. The Dow had gone back to the 11000 range, then dipped 10-12% over the past month. Diversify investments, and keep buying if you are younger.

Yup! That's what we're doing, too. Yes, our Roth is not pretty right now but we're listening to our heads and waiting it out. As long as you are several years from retirement, wait it out.

 

[sk8jdgca]

The only way for your account to go to zero is for EVERY holding in your portfolio to go bankrupt. If you have a balanced portfolio that includes government bonds, the country would have to go bankrupt also and if that happens the only things you need are the three G's -a garden, gold and a gun to protect the other 2. Do you believe that we will continue to be a capatilistic society?? or do you think we will go back to living in huts and hunting for food?
You are currently buying low-it may not seem like it but this is good for you if you are years away from retirement.
Markets go up...markets go down- it is like the price of gas-every day it is different but over the long term it is up

 

[Havana]

Same situation here too. We fully fund our IRA's every year. They have taken a beating, and it is so discouraging. We will stick with it though.

 

[TheRatPack]

Okay...well it's a Simple IRA and it's with a financial company that buys/sells for you (through the employers), UBS. Currently looks like we're about 50/50 with cash and equities and the majority of the investment going in to CWGIX. We are in our mid/late 30's....so a little while until retirement, it's just hard knowing that the money we put in every month is not really doing anything to help the fund....it's just kind of getting tossed to the lions to cover the losses.

Oh well, maybe I just won't open the statements for a few months LOL Or maybe we'll move our funds to something else? Our statement says we're at a Moderate risk....I can't imagine if we'd chosen something even riskier would it say severe? LOL

 

[eliza61]

Okay....so for a few years now we've been socking away at the retirement account....well quite a few years LOL It got up there to an amount we were comfortable with, but then the economy took a dive and so did our retirement account. I opened up the statement today and WOW....was that depressing. All the money that was taken from checks in June, and the companies match are GONE as is another 50.00 or so. So the money that was deducted from checks for the retirement account was pretty much just tossed, and almost broke even from the losses this month....how depressing.

We are invested with a good company....and have a safe option as well as a riskier one since we're younger....but this is just getting to be a bit much. I was reading an article on it and saw that a lot of people are having this problem and wonder if they account will just zero out soon...and was kind of comforted by the fact that I had found more people with the same concern and they were all sticking it out, saying that it would recover in a couple of years and that we'd have bought a lot of cheap stock by then LOL Then I looked at the date of the article and it was 2008 Ummm, if we're still losing that much money every month....and it's been 2 years, I think it's definitely time to evaluate where our money is and change some things. We can not afford to keep losing that much every month....it's crazy!

So what seems to be the safest route in this situation? Put it in to something more stable, even though the thought of selling low is crud too....LOL I guess I'm just trying to weigh our options....I do not want to be sitting here 2 years from now with a zero account balance, and keep losing all that money each month that could go towards other savings. But we've never had to deal with any kind of rollover or account closure...etc. And if we stop contributing at all, it's going to sink awfully fast.

There is a general rule of thumb that people use to use. I think it went some thing like this. If you are in your 20 subtract that from 100 and that should be the % in growth and stock funds. So in your 20's it should be 80% growth, 20% stable. 30's 70% growth, 30% stable. etc, etc.

Now if you are still losing money it may be time to take a look at your entire package (fees, etc) primarily because the market is doing pretty well from the nose dive of 2008 so you should see some recoupment from that low. Dow Jones is above 10,000.

Are you talking about a fund that is well diversified? I would not be sinking my money in an retirement account that is only company stock, that is a recipe for disaster. My dh works for a large petroleum company and we only have about 10% of their company stock in our portfolio and they routinely make a huge profit.

I just checked my 401K account with Merrill lynch and it's down 5% for the quarter but up 12% for the year. So your numbers may just be reflecting a small snapshot in time.

 

[Golf4food]

Are you talking about a fund that is well diversified? I would not be sinking my money in an retirement account that is only company stock, that is a recipe for disaster. My dh works for a large petroleum company and we only have about 10% of their company stock in our portfolio and they routinely make a huge profit.

I just checked my 401K account with Merrill lynch and it's down 5% for the quarter but up 12% for the year. So your numbers may just be reflecting a small snapshot in time.

Indeed, some experts would recommend that the proper amount of money to keep in company stock is ZERO.

Make sure your account is diversified, keep contributing (a down market is when you should buy MORE, not less), and just remember that those losses are all fiction until you sell - only then do they become real. The market WILL go back up before you retire and when it does all of those shares you are getting now on the cheap will be worth that much more down the road and you will have made more money on them than if they had always been high. Now is a great time to invest if you are many years away from retirement.

 

[Disneycrazymom]

Make an appointment with a trusted financial planner. Someone who you have references for and go in and listen to what they tell you. If they spend the appointment trying to sell you a product then they are not the right one! If they spend the time explaining several different options and why they work together, you have a good one. The market is doing some crazy stuff right now and it is good to have someone help you watch it and your money.

 

[dvcgirl]

Here's the mistake that most people make. When the market is down, they look at their statements and go "oh no, I've lost so much money" Let's look at two scenarios. Person A sells right away because they don't want to lose any more money and "throw good money after bad". Person A has definitely lost $.

Person B hangs in there and is buying more shares for less money versus before. When the stock market recovers, those paper losses will have turned back positive.

When the market recovers (even slightly), person A says "wow, now's the time to get back in". But when you think about it, person A has done the opposite of most investment gurus. You want to buy low and sell high, but they've sold low and now want to buy when it's high.

Retirement accounts that you contribute to every paycheck have a way of balancing what you are buying (dollar cost averaging). Because you contribute the same amount every time, when the market is high, you are buying less shares. When the market is low, you are buying more shares. This is really the ideal because it's next to impossible to time when prices will be high or low.

If you are years away from needing the money, I would keep sticking with it.

Exactly right.

What the OP needs to understand is that they are buying *shares*....and concentrate on that fact. The balance will fluctuate.....but by buying and investing in your mutual funds month in and out, or dollar cost averaging, you are smoothing out the bumps in the road. Admittedly, things are a more than a bit bumpy these days, and we may have a ways more to head down (even though we've seen a bit of a rally in the last few days).

The only time I've veered from this basic strategy was from November of 2007 through January of 2009. We moved out of mutual funds to cash during that time....and were thankful that we did. We sold high and when everyone said the world was ending, we got back in. We saw a huge run-up in the markets, and just when things were up 50% or more, retail investors jumped back in....at the exact wrong time.

You've got to zig when everyone else zags......

 

[mrodgers]

Think of it this way....

Every day, you buy $5 worth of Pepsi. Today a can of Pepsi is $0.50 each, so you buy 10 cans of Pepsi worth $5.00.

Tomorrow, the value of Pepsi drops to $0.25. You still have 10 cans of Pepsi, but they are now worth $2.50. You lost half your money.

But, you are still buying Pepsi every day. You buy another $5 worth, but now that is 20 cans of Pepsi. You now have 30 cans of Pepsi, you've contributed $10 total, but it is only worth $7.50.

The next day, the economy rebounds and Pepsi is suddenly worth $0.75 a can. You have 30 cans before you buy more. You contributed the previous 2 days $10 and your 30 cans of Pepsi is now worth $22.50.

You lost value from that 2nd day, but you still had the same number of cans, plus bought more cans at the reduced value.

I lost more than 50% in 2008. We are in the middle of switching companies so I don't know what it is doing right at this moment, but I've made up what I lost and then some the last time I looked, which to be honest, was probably last year.

 

[louey]

Make an appointment with a trusted financial planner. Someone who you have references for and go in and listen to what they tell you. If they spend the appointment trying to sell you a product then they are not the right one! If they spend the time explaining several different options and why they work together, you have a good one. The market is doing some crazy stuff right now and it is good to have someone help you watch it and your money.

I did just this about a week ago, I spoke with my moms financial planner. My husband and I are both in 401k and I wanted to be sure that we were making smart choices on our investments. He looked at both of our statements and liked what he saw, just told me to be sure my husband doesn't go over a certain amount in his company stock. It cost me nothing to do this and I felt alot better.

 

[Mustangdi]

I have a very aggresive portfolio in my 401k right now. I still have a
while, 5-6 yrs before I retire. I have always been reminded to buy low
sell high, and stay the course. I am only down by a few thousand from my
all time high. I work for the #2 pharma co in the world and I am heavy in
comp stock. It was bumpy for a time, but I love to keep up with the market.
When the #'s go down I refuse to check my balance. I know that I am
buying more shares.

 

[wdwfan16]

Okay...well it's a Simple IRA and it's with a financial company that buys/sells for you (through the employers), UBS. Currently looks like we're about 50/50 with cash and equities and the majority of the investment going in to CWGIX. We are in our mid/late 30's....so a little while until retirement, it's just hard knowing that the money we put in every month is not really doing anything to help the fund....it's just kind of getting tossed to the lions to cover the losses.

Oh well, maybe I just won't open the statements for a few months LOL Or maybe we'll move our funds to something else? Our statement says we're at a Moderate risk....I can't imagine if we'd chosen something even riskier would it say severe? LOL

CWGIX is a good fund. http://finance.yahoo.com/q?s=CWGIX

You should be more diversified then you are.

Does your company have any targeted funds? That maybe a great fund to add to your portfolio. Since you are late 30s, I will use 37 and I will also use that DH will retire at 65.

65-37 = 28. Round up to the next 10. Add that to the current year and that is the fund to buy. In this case it would be a 2040 fund.

A targeted fund balances it on how far you are from retirement. As you get older the fund gets more conservative.

 

[wdwfan16]

I have a very aggresive portfolio in my 401k right now. I still have a
while, 5-6 yrs before I retire. I have always been reminded to buy low
sell high, and stay the course. I am only down by a few thousand from my
all time high. I work for the #2 pharma co in the world and I am heavy in
comp stock. It was bumpy for a time, but I love to keep up with the market.
When the #'s go down I refuse to check my balance. I know that I am
buying more shares.

You are making two major financial mistakes. You should be getting conservative so close to retirement and you have your retirement and job all vested in the same company. Pharmaceutical company stock could easily go down with the new health care reform.


Does Enron ring a bell?