Right now I’m sure a lot of people are wondering why are they contributing to retirement? Especially if you are in your 20s and you’d really rather spend your money on anything else! Personally I’d rather be blowing the money too. But I’m not. Here’s an article by Walter Updegrave about it (love his book We’re not in Kansas anymore).
Right now is the time to stay the course. Keep on plowing more and more money into your retirement accounts (Roth IRAs and 401ks). This is the time to buy stuff cheap. Sure it hurts to see your 401k down lower than the amount you’ve contributed. Right now DH has lost about 2% for the year, not great when you consider we’re maxing our his 401k. But we’re not touching the money for another 30 years. So where else will it go but up?
I know it’s tough to see the long term benefits of it, especially when the balance of your account is stagnating or going down. But perhaps now would be the time to contribute and not look at till the end of the year. If you have a weak stomach, keep the statements closed. As long as you have a balanced, diversified portfolio say 80% stocks/20% or 90% stocks/10% bonds, let it go. You won’t need to look at the statements for taxes and maybe by the end of the year you’ll end up in some sort of positive territory. If not, keep the statements closed for another year.
Right now we’re trying our a few new techniques with our investing. Because of our time frame, about 30 years, we’re investing the 401k in company chosen mutual funds. But our Roth IRAs we’ve split between DH’s chosen stocks, and a new strategy of no-timing ETFs. We’re not sure how it will play out. I’ll explain it later when I have more time. But since we’ve started we’ve outperformed the S and P and substantially decreased our portfolio risk by 100% at the same time.
But for now the #1 factor in having a secure retirement? Keep contributing. Don’t Stop and don’t lose faith.
4 responses so far ↓
1 Barb1954 // May 12, 2008 at 5:01 pm
Not every investment or fund has gone down. DH and I put $5,000 each into CGM Focus Fund in new Roth IRAs on April 15th and the fund has gone up 8% since then. This fund returned 80% last year.
2 Livingalmostlarge // May 12, 2008 at 7:13 pm
Right, but that’s in a self-directed Roth IRA. Those are easier to pick better funds. In a 401k the selection of funds is very limited and often poor choices.
Right now DH’s Roth IRA is up 12% for the YTD and mine is down -2% YTD, although it might be rebounding soon since we’re trying something new out. And DH’s 401k is down 2%.
I think 401k has been hit hard, because the selection choices are limited.
3 Jim ~ mydebtblog.com // May 13, 2008 at 2:12 pm
I don’t think every fund has gone down. I’ve got one 401k that’s down 3% and another that’s up 1%. It is due to limited choices to pick from and a lot of stuff is down right now. Sometimes a down market can be a good thing though, because it takes less money to get in and the end result will more than likely be more money. I have a harder time investing money into something going up because it costs more to get in. The whole retirement game is a long haul and it’s better to start in your 20s than wait until your 40s or later to play.
4 Simon // May 19, 2008 at 6:58 pm
My funds had a slight dip, but everything i have put in is still far less than the current value. Its starting moving north again recently which is good. I stepped up my contributions during the recent price drop to try to buy some stuff low while i could. My wife just finished college a couple of years ago and started her 401k at the beginning of the year (had a wait period on teh job plan) when the prices were down too, so she didnt lose anything, just bought dirt cheap!
Leave a Comment