So, your 401K is tanking, what can you do?

[her209]

Originally posted by: msparish

Originally posted by: SSSnail
Maybe I fail at math, but how do I get more shares if I'm losing substantially more money than both my contribution and matching? Assuming that they purchase the shares with my contribution and then the share lose money, again at a rate far more than what I contribute, would I lose A LOT OF TIME if it starts to turn positive again? So how many years would that be? Wouldn't it be better for me to stop the loss with some other means?

Yes, I understand all that "buy low sell high", "long term investments" yaddy yadda (are you freaking serious when you were asking that?). I'm trying to maximize my returns with my time. It's a very ambitious goal but I'm planning to retire at 45, 50 latest. 32 now.

As an example: You invest $100/month into a mutual fund for retirement. Assume last month the price was $100/share. That means you bought one share last month. This month the price is only $90, so you get to buy 1.11 shares.

So, you now have more shares than if the market had stayed constant. Over the long term, when the market bounces back up, you will end with more money.

Dollar-Cost Averaging

 

[cKGunslinger]

Increase your contributions!

 

[Danman]

I just checked this morning on mine, I lost about 10% across the board. Kind of crappy, but what can you do. I got at least another 30 years before I retire for it to grow.

 

[SSSnail]

Originally posted by: her209
I thought everyone on ATOT was +100% YTD.

I belong to the 5% of ATOT that's not yet a millionaire, so I sometimes ask for advise. I so want to be like the rest of them one of these day.

 

[Pliablemoose]

I'm down about 10%, sucks, but that's Mr Market for you.

Don't worry about it, just keep plugging away, trust me

If you're really risk averse, put your $ in the lower returning bond funds etc...

It's all related to your willingness to take risks with your nest egg... Everyone's risk level is different...

 

[Engineer]

Buy more.

 

[Special K]

OP I suggest you go to the diehards forum and start reading. Also, I would suggest reading some good books on investing such as A Random Walk Down Wall Street and The Bogleheads' Guide to Investing.

It sounds like you have an unrealistic expectation that your portfolio is always going to have positive returns. If you put together a portfolio that never had negative returns over any time period, you should probably be a fund manager by now.

 

[overst33r]

I just started my Roth IRA last month and so far have lost about 10%... I'm not worried about it since I'm young. My solution: Invest more!

 

[imported_Baloo]

As you said, balance it to more stable options. Don't just sit on it, you could lose a lot more than 11% if you do that. The economy is not going to improve any time soon--probably not for at least a 18 months. More likely, it will worsen. Move the asset distribution where it will make money, however small, keeping it in the plan.

I knew a few people that just "waited it out" during the dot com burst, they lost more than half of what they had in there 401K's. I lost several hundred before moving it. Have not lost anything since, despite the bad economy over the last 6+ years.

 

[Mark R]

I think the point is that if your money is in funds, which are likely to have 'negative return' over the short-to-medium term (e.g. equity funds), then surely the thing to do is to move it to funds which are less likely to have a 'negative return' (e.g. commodity or EUR funds).

Of course, in long term investing, the aim is to use time to average out the peaks and the troughs. In times of low price, you get more for your money; In times of rising prices, you gain high returns.

Whether you choose to trade the market, or simply ride it is up to you. However, trading brings with it risks, because if you time it wrongly you can worsen your position substantially, but at the same time, there are potentially large gains if you step out of a falling market, into a rising one.

 

[Dulanic]

Originally posted by: Danman
I just checked this morning on mine, I lost about 10% across the board. Kind of crappy, but what can you do. I got at least another 30 years before I retire for it to grow.

Exactly, not much you can do. I'm, at -9.5%. Even foreign funds are down for the most part, Im down 9% there.

 

[LegendKiller]

Put more in! I put in the 15.5k with the company match of 7.75, my company's profit sharing (7.5% of comp). I'd put more in, but I can't! IRA time! I am just hoping the market goes lower by March 1st, that way when my bonus hits and I get a ton of money put into 401k, it's at a lower point.

 

[Azurik]

If you're trying to time the market, you're a few months behind.

The best thing at this point is do what others have said. Continue to contribute an even amount every week/bi-week and dollar cost average in.

It's not because your index fund choices suck, the entire market is down. Virtually all individual stocks are down. Your index funds suffered the same fate.

 

[DaveSimmons]

Originally posted by: Baloo
I knew a few people that just "waited it out" during the dot com burst, they lost more than half of what they had in there 401K's..

S&P 500 index fund shares bought pre-crash were back in the black after a few years, and people who kept buying more post-crash did very well.

This is a good time to buy stock index funds in your 401k, "buy low." The market may not have bottomed out yet but you'll still get a nice increase if you buy and hold for the long term.

If you switch to bonds now you'll be selling low instead, and unless you switch back in time you'll miss the quick gains when the market comes back. If you switch back too late you'll sell low then buy high.

 

[V00DOO]

I just cut my contribution from 6% to 3% which my company matches. I also moved half of my portfolio to International Funds in December. I'll increase the contribution to 10% once I feel the market is near bottom. Another option is borrow against your 401K and paid yourself interest which is very risky and not recommended. If you must take money out of your 401K that's the route I'll take.

 

[Vic]

Move it into bonds.

 

[Dacalo]

Contribute more; funds are on sale.

 

[Exterous]

I feel a bit better now about my -1.1%

Originally posted by: Dacalo
Contribute more; funds are on sale.

lol

 

[OS]

take a loan against your 401K and use it to short the market.

 

[Eeezee]

Originally posted by: NL5
Yes, take out your money when it's low! That's the way to make big profits!

Seriously, unless you are 5 years or less away from retirement, don't sweat it. If you are in decent funds, strat buying MORE now while it's low.

It amazes me how many people want to invest more when returns are super high, and then dump it when it tanks. Ass backwards.......

Everything I've been reading seems to indicate that we're not at the low yet. It would be wiser to wait a little longer before buying. 2008 is going to be a rough year.

 

[compuwiz1]

Don't panic. A 401k is a long term investment, subject to short term roller coaster rides. Would you rather have a periodically volatile 401k, or pay more income tax?

 

[boomerang]

Stop your contributions, cash in the 401K and take the tax hit. You're too high-strung to be in the market.

Stuff it under your mattress.

 

[NL5]

Originally posted by: Eeezee

Originally posted by: NL5
Yes, take out your money when it's low! That's the way to make big profits!

Seriously, unless you are 5 years or less away from retirement, don't sweat it. If you are in decent funds, strat buying MORE now while it's low.

It amazes me how many people want to invest more when returns are super high, and then dump it when it tanks. Ass backwards.......

Everything I've been reading seems to indicate that we're not at the low yet. It would be wiser to wait a little longer before buying. 2008 is going to be a rough year.

Even if it does go lower, you are still saving 10% off a few weeks ago, right? There is no reason for a young person, unless you are retiring WAY early, to try and second guess the market with your retirement fund. Do that with some of your savings..........

 

[Capt Caveman]

Your shares have lost value but your quantity of shares have not. In time, the value of those shares will go back-up. If anything, this a great time to purchase more shares since their value has lowered.

 

[Fritzo]

Originally posted by: Brainonska511
Stop micromanaging it and let it sit for the long run. You could see about moving it within the current company to bonds to reduce some of the losses.

x1000000


People that move funds move that once every few years will end up losing more money that someone that doesn't touch the money at all. Just let it be and it'll come back eventually. The only time you need to worry is if you're going to cash out right now.