My 401K invsmnts are mod. aggressive (50% stock, 30 intl stock and 20 fixed income). Down 9%, should I change

Question

My 401K is down 9% and the ecomony has me worried. I'm mid 40s and was wondering if I should scale back to a more conservative investment strategy over the next 2 quarters or "stay the course". I don't want to lose anymore money than I already have.

Answer 1

Depends on your age.

Answer 2

Hey Mark

If history has proven one thing to us , it is that the markets come back over time. You have between 15 and 20 years for the market to make you money, so, be more aggresive, get rid of the fixed income, put all your money in the markets, global and US, then in 10 years put 20% into fixed, 5 years later put another 20% in fixed, and finally when you retire but another 40% into perserving your principal while getting income. Leave 20 to 10% in stocks.

The worst thing to do is to sell when the market is down, that is the opposite of what you want to do which is buy low and sell high!!!

Good luck buddy.

Stu

Answer 3

How long have you been in the 401 ?

How much profit have you made?

Haven't you seen this happen before?

Sure it gets harder to look at when the bundle gets bigger ( and you get older)...but I would venture a guess to say that in the 15 years or so that you have in front of you, you will see changes of 9%...15 %... maybe even 20 !!  BUT, BUT, BUT...some of those same numbers will be to the UPSIDE.

Get something like a ROTH IRA going besides your 401...and get aggressive in that...and move to " what's working" every so often.   ( Believe it or not..some things  energy, mining, materials, ag chemicals , nat resources, are UP since JAN... some funds, too. )

As for getting more " conservative" in the next two quarters,  that means it will just take you longer to get back to where you were in  Dec/Jan.

Answer 4

I think your allocation is fine, you shouldnt worry about losses in the short term 9% is nothing. Everytime the economy corrects a lot of people come out with doom and gloom predictions on Wall St. but you should not pay attention to this if your money is for retirement. Most likely in a year 90% of this will be behind us. The US has a very resilient economy and it will survive this credit crisis.

Answer 5

i have joined managed acc for more than 6 months , make minimum 5% per month , i suggest is , your trader is not professsinonal yet , what i recommend me is withdraw everything out and take a look at my investments

Answer 6

Well...if you switch to bonds now and interest rates go up, your bond prices will go down and you will either be forced to wait until the bond matures, or sell at a loss

Answer 7

Two quarters??/ two quarters???

erm, no ... you know what, in 1989 the Nikkei (Japan) was 3 times higher than it is now - I know people who were picking bottoms and thinking it was all over in 1990.... don't for one second think the economic turmoil we're in now will last for 2 quarters, it's going to be years, maybe even decades before the US is back on track and growing again, in the meantime ... I would advise trading ranges, when it goes too far on the sell, BUY some but get out for the bounce .... get yourself in TIPS

In stagflation, which is where we're heading, bonds and stocks will both fall ....

don't always listen to the advice that stocks always go back up, they don't. that's just something this generation of investors are used to ... people buying dow stocks in 1929 wouldn't have seen a positive return until the 1950s, only to have that wiped out in the 70s with inflation. We had it too good in the 80s and 90s, fuelled mainly by cheap credit, by 2000 we dumped, and would have continued but for MORE artificial stimulation by the fed,  and that leads us to where we are now ... party over

Answer 8

Stick with what you have at this point you should think about how much you own as opposed to how much it's worth.  You still have the same amount of shares you don't have fewer and you are able to buy more at a lower price right now.  The market will right itself by the time you retire, and you will be in much better shape than if you changed now.

Answer 9

Considering your age I think that your allocation is actually allright.  Retirement will probably be over 15 years away and the last thing that you want to do is to dump the equities that show growth promise and head into bonds when that interest rates are headed up (bonds go down).

Going to cash would have been a great idea when that the Dow hit 14000 but that is hindsight.  Not many people did it.

The U.S. stocks have been hammered and many people believe that post olympics it might be the safest place to put your money.  Things will turn around.  You are fortunate that you don't need this money right now.  Then your allocation question would be a much tougher one to act on.

Answer 10

No, you are at the right age to continue what you are doing.  The stock market still has time to rebound.  If you are really scared than I would move some of your stock to fixed income but not more than about 10%.  I would leave the international stock alone.