should you get out?

[moonshinner]

stock market drops alot,people with retirement in the markets could lose alot of there money,i wonder if this will keep going down,Obama better get is act together an put people in that knows how to fix the nation, things are tough all over the world,hop the best for are nation an are presdent

 

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[stefen]

The only other vehicle is either gold or bonds...

Me...I'm staying in and will eventually fully recover which is better than bailing at a low rate plus brokerage fees, additive income tax expenses, and brokerage fees on reinvestments...

 

[moonshinner]

u may wont to get out of stocks for a while,put your money at home maybe, the way things is now, don't know, i think gold is to high for reg. people to buy,u may buy silver,we r in troubled times,not just the u.s but the world,i have never seen a mess like this,interest rates will have to go up because they r so low,.people in the stock market good luck u will need it

 

[stefen]

There are rules of thumb for entering the stock market:

1. Risk only what you'r willing to walk away from

2. Be well informed

3. Be a smart investor

4. The only person to blame is yourself

5. No pain, no gain

 

[rockhound]

I just checked my 401K today, I lost almost $3000.00 in the last two weeks. It will take a while to recoupe that unless things turn around fast. I will keep close tabs on it and see which way it goes. I may have to take a loss and pull it out. It has bounced back some already, but a loss of that many points usually takes months or even years to recoupe. rockhound

 

[stefen]

My investment, unlike a 401K is a solitary stock and has already rebounded 20 points today...

Your 401K, however, is composed of hundreds, if not thousands, of stocks and reflects the total stock market.

So if you pull it out, what do you gain, if anything?

Here's the facts: (using a $9000 401K investment for conversation purposes)

1. The 401K has lost 33% (or $3000) of its value...

2. You are penalized for early withdrawl by a reduction of funds...10 to 30%, depending on Fund Contract ($600 to $1800).

3. You are taxed on the full amount of the funds withdrawn ($6000)...maybe as high as 28% ($1680) or more, depending on tax bracket.

4. Lets say your 401K is worth $9,000. Because of the market you lost $3000. Early withdrawl takes another $600 to $1800. Now Uncle Sam is going to tax you on the full value of the $6000 at 28%...($1680)...

5. Your $9000 nest egg is now worth between $3720 and $2520...WOW

If you leave the $6000 intact, you will reap the future regrowth (recovery)...

By actually doing nothing, you're ahead of the game...

.................................................................................

Lets look at your dilemma from another direction.

If you move out of the 401K, precisely what investment vehicle will you use? (and the mattress is not a valid option.)

Municipal bonds is a good choice, however, your 401K plan probable had 40 to 60% invested in muni-bonds.

Gold is another choice. You could buy 1 or 2 ounces based on your situation. Gold will even out when the stock market stabilizes...thats historic. So this choice is a barely break-even investment at this time...based on such a low purchase position.

Real estate is a bust...when 1Mil property is selling for $300K and may drop more...$2520 to $3720 may be a down payment for a trailer in the boonies.

..............................................................

As I was asked once, "Which line should I stand in, the one marked BRAINS or the one marked TRAINS..."

 

[SFBayArea]

With all the uncertainty. Why not just do short term day trades? Don't care what they're going to do long term but that's too uncertain. Afterall that's what those funds do. It's no longer a buy and hold environment.

Cash out before the end of the day because who knows what's going to happen in afterhours or overnight.

Just do short term percentage gains and add up the percentage gains over time.

 

[stefen]

To each his own...I totally disagree and I'm ahead of the game by far...

 

[SFBayArea]

To each his own...I totally disagree and I'm ahead of the game by far...

What percentage are you up by so far this year?