Have you been loosing $ in your 401k?

Question

I have, and im worried, what should i do?

Answer 1

No.  My 401(k) investments are down right now, but I haven't "lost" anything because I'm not panicking and selling.

Answer 2

don't panic. you'll be fine. If you're so worried about it, just try to invest most of your 401k money in bonds instead of stocks.

Answer 3

It's hard to lose money in a 401k.  

Every dollar I deposit is one less dollar taxed.  I save 25 cents on every dollar deposited... or in other words 33% return on 75 cents...

If your employer matches any money at all... most contribute 1 for one, you're making 133% return on investment.  In other words, you don't start losing in your 401k until the 2.00 becomes 75 cents.  that's huge losses.  Sit tight. You'll be fine.  difersify.

Answer 4

We have been in a bear market since the Fall.  Many investors have seen their 401k balances decline in this time period.  You should re-examine your investment choices to see how they are performing as compared to the stock market  indices like the Dow Jones, S&P 500 etc.  If you own mutual funds, like most 401k investors, you should compare their performance over this last year versus the index that they benchmark against and also against funds in their same category (i.e. compare your large cap growth funds against other large cap growth funds).  The Wall Street Journal recently reported the performance quintiles of most mutual funds for the last year (many other publications do this too).  Basically, they rank all of the mutual funds in their specific category and assign letter grades of A through E.   If your funds are in the bottom 50% (C or lower), and have been getting those low grades for three years, you may want to consider changing mutual funds.  If your funds are underperforming, use any bounce back in the market to make the change.  If the underperformance has gone on for 3 years, don't just assume it will get better.

This is also a good time to see if you are adequately diversified.  Depending on your risk tolerance, the percentage of your portfolio invested in stock funds could be equal to 100 minus your age, with the remainder in bonds or money markets.  Of the percent invested in stocks, that should be split among international funds, and the different large, mid-cap or small cap funds if they are available in your fund.

If you have investments in money markets, it still may be too early to re-direct that into stocks or bonds, as this bear market could go on into next year.  However at some point, maybe by January or when the Dow sinks to 9000 or so, the market may begin to anticipate a recovery in the economy.  However, so much of that depends on the housing market and whether it recovers by then.

Also, much could depend on the election, energy prices, inflation and interest rates.  If government spending is curtailed, inflation could be kept under control and interest rates may not rise much.  if interest rates start to rise, stock mutual funds and bonds will do poorly.  If the govt starts a bunch of new spending programs without cutting others, that will be perceived as bad policy and stocks will go down.   Similarly, some increase in taxes could be expected, but if there are more, that could have a bad affect on the stock market.

Above all, keep contributing to your 401k, or increase if you are not maxed out, even if you direct more of your contributions into money market funds until the outlook becomes less dire.  If you get a company match, it is the best deal going.