401k withdrawel?

Question

My company sponsored 401k is losing all of my money. I switched 2 quarters ago to there best and only profitable investment, now it is losing money. They say I cant remove my money while still employed. There has to be a way to stop the money loss. $650. last quarter.

Answer 1

It depends on how old you are. If you're 45+, remove the money or switch it to an IRA. If you're under 45, DO NOT TOUCH IT.

If you are 25 for example, the money has 20 years to mature. Just because your money is diving now, there's no reason to suggest it will be diving 20 years from now. Further more, it's not a common thing for 401k's to lose value so, there's really nothing to worry about.

I cannot stress this enough, if you are under 45, do not touch your 401k. Leave it the way it is, things will get better.

Answer 2

You have not lost ANY money if you hold shares in funds and you have not sold them, you can only lose money buy selling the shares for less than you paid for them.

If you "lost" $650 last quarter and the total value of your account is $13,000 or less, then you are ahead of the game (the average market loss during that period was greater than 2.5%) and you should stop looking; if the value of your account is greater than $13,000 then $650 is pretty much meaningless noise, and you should stop looking!

If you are a young person (under 40), then ALL your 401(k) money should be in the most aggressive growth fund available to you...that way you buy more shares when the price is down and less when it's up; think about it this way, if you were buying cans of "magic tuna fish"* to save and eat in retirement, if the "value" (ie the price per can) goes down, should you sell all the cans you already have saved? Or should you BUY MORE while they are "on sale"?

Answer 3

401k is for the long haul... Use your yearly statement to move stuff around.  Go international right now.  Do not take it out, you already lost what you lost and to take out now would mean more lose with early penalties.

Answer 4

Most plans, (if not all plans) have a money market fund.  Why not simply switch to it??  Money markets rarely lose money.  But if you are a long term investor, you should look at these pullbacks as buying opportunities.  Why only buy when the market is heading up, and mutual fund shares are much more expensive??

I am some what amused at your concern about your $650 loss last quarter.  My loss last quarter was $15,000.  Of course it's all relative to what one has invested.  

Think long term, when it comes to investing, and not concentrate on the last quarter.  Don't get hung up on the short term.  Think about 10, 20, 30 year returns.