Well my 401k has turned to trash. Anyone else?

[TwixVoy]

After several years of growth my 401k was up 17% since the time I started it. Since december it has now gone from positive 17% to negative 23%.

I put everything in the SAFEST investments that were offered. (which honestly, aren't very diverse or very safe)

Sure makes you wish everything was tied to the stock market right? What a joke.

[Olney Blue]

1. I lost 10K last quarter. Gotta move out of mutuals ASAP.

[A HERETIC I AM]

23. That is exactly why so many investors lose money.

They panic when the market is down and they sell.

Is "Buy High, Sell Low" your investing strategy?

If it is, it is a strategy doomed to fail.

[girl gone mad]

30. What evidence do you have..

that people who sell now are selling "low"?

[A HERETIC I AM]

41. A valid point.

If you bought at $10.00 a share (be it a stock, Mutual Fund or whatever) and those shares went to $20.00 but are now at $15.00 and you sell, you're correct, you haven't lost money, you've made five bucks a share.

But what happens with Mutual Funds held in 401(K) plans is people typically reinvest dividends, interest and capital gains. Interest and dividend payments often come monthly, capital gains payments once a year. So it is not at all unusual when a Mutual Fund is held for an extended period to have a cost basis schedule for those shares that is all over the map. You are bound to sell some at a loss and some at a gain if you sell now.

[LSK]

95. stock prices???

:wtf:

[Olney Blue]

31. What should I do then? I am contemplating retirement in a few years

and my mutual funds are losing money hand over fist. However, my bonds are holding steady.

I have not changed my allocations in 20 years- wish I had a strategy at all..... because I'm entirely at the mercy of the stock market! x(

[elocs]

36. If you are contemplating retiring in a few years, why were you not mostly in bonds?

I have as friends a married couple who were in their early 602 in 2001 and they trusted their Prudential financial advisor who had them mostly in the stock market. Needless to say, after 9/11 they lost half of all they had and will never be able to make it up. Being so close to retirement they should have been in a much safer position and been mostly in bonds, but they had not changed their allocations in years. Bad mistake. Their Prudential advisor still made money.

[MISSDem]

37. Not everyone agrees that you should be all in bonds

even in retirement. You can't keep up with inflation in bonds. And you should keep investing even though you retire, although I personally don't see why everyone wants to "retire".

[elocs]

49. Well, I said "mostly", not "all". It's a pretty common investing philosophy.

This couple are very conservative and they trusted someone else to take care of their finances who had them in a very risky position being nearly entirely in stocks and close to retiring. As far as wanting to retire, they, like many people, worked hard all of their lives and not necessarily at jobs they loved, but at jobs that were needed to pay the bills. They simply wanted to enjoy some free time and travel to visit their children and grandchildren.

Investing is very personal, though, and its dicey telling someone else what to do. In the summer of 2001 I had been reading for months that stocks were over valued, so in August I got out of the market altogether. After what happened on 9/11 it turned out to be a great decision. That was of little comfort to my friends who lost half of everything they had. They still could have been partially invested in the market, but mostly safe in bonds.

[JDPriestly]

66. Have you read Fooled by Randomness?

[Olney Blue]

39. My retirement plan did great in the 80's, and 90's so I just kept it going as is.

It wasn't until the chimp's recession hit that I started taking major hits.

I don't have a financial advisor. I have trouble with trusting anyone as you just illustrated.

[spooky3]

56. The Bush admin. has been AWFUL for retirement investors.

[Median Democrat]

82. Dow Is Only Up About 7% Since Clinton Years!

I recall that the Dow peaked at about 12,000 under Clinton, and it is not 12,900. So, over 7 years of Bush, the Dow has gone up a total of 7%. So, I leave it to you math wizzes to figure out the annual return under Bush.

[Median Democrat]

83. Dow Is Only Up About 7% Since Clinton Years!

I recall that the Dow peaked at about 12,000 under Clinton, and it is not 12,900. So, over 7 years of Bush, the Dow has gone up a total of 7%. So, I leave it to you math wizzes to figure out the annual return under Bush.

[A HERETIC I AM]

85. If your entire investment portfolio is the 30 Dow stocks....

then you deserve to have had only 7% returns.

Most people are a little more diversified (or at least they should be)

[Median Democrat]

86. Under Bush, S&P 500 Has Less Than 3.5% Annual Return

Even if you were properly diversified into an index fund, you would have gained less than a 3.5% annual return during the George Bush years.

[A HERETIC I AM]

92. If your entire investment portfolio is an S & P 500 index fund

You deserve a 3.5% return.

There is no reason in the world why one could not have averaged a 10% annual rate of return for the last ten years, if properly diversified, sector weighted and allocated across the various asset classes.

None.

[Median Democrat]

96. What's your recommended allocation?

By asset class? I am curious as to what kind of allocation would earn me a 10% return over the past 10 years and the next 10.

[spooky3]

98. I'd be surprised if you get an answer - and of course it will be post hoc.

In 1996, I asked the chairman of a top business school's finance department - who traveled around the country teaching investments - if he would share advice on this topic. His answer: "You'll laugh - but I have all of my retirement money in index funds." As he said at the time, index funds have, over time, outperformed nearly every other type of investment of comparable risk. Remember - this is someone paid to help people beat the performance of index funds - and probably more qualified than most posters on internet boards to give advice.

[A HERETIC I AM]

102. "Of comparable risk"

Of course it will be "Post Hoc".

I wouldn't want to disappoint you.

His answer: "You'll laugh - but I have all of my retirement money in index funds." As he said at the time, index funds have, over time, outperformed nearly every other type of investment of comparable risk.

Again, "Of comparable risk".

If you are happy watching your portfolio value go up and down like the S & P 500 has for the last ten years then you should absolutely buy index Mutual Funds. If you think a collection of investments that have a Beta of 1.00 and a neutral or negative Alpha is what suits you, then Index funds are for you. If you think you are prepared to time the market, then you'll make out like a fucking bandit. If you aren't (and most people aren't) you are going to realize the rate of return the index gives you.

You are absolutely correct, Spooky3. I can, with out fail, give Median Democrat an allocation that would have provided a 10% total return over the last ten years. - "Post Hoc". I can in no way assure him of the same returns going forward. (Past performance is no guarantee of future results) But I sure as hell can put in place a strategy that will ensure his portfolio will capture most of the upside but minimize the downside.

Because I am not interested in "comparable risk".

I'm interested in mitigating risk and capturing reward.

And I don't do it for free on a public message board.

[spooky3]

103. then don't expect anyone to be convinced

[A HERETIC I AM]

105. I don't expect people to be convinced.

I merely hope they are educated enough to make the proper decisions. If they aren't, I hope they are at least honest with themselves in that regard and seek personalized, professional help when it is needed.

Fair enough?

[pitohui]

113. money talks and bullshit walks

people who claim to be able to time the market...it's funny how they always want to convince US and get their hands on OUR money, isn't it?

[A HERETIC I AM]

101. I don't recommend particular allocation models to anonymous people on the internet.

To do so is foolish, pointless and completely inappropriate. I'll leave particular investment recommendations up to the others on this board that do so regularly. I don't think it is proper to give specific investment advice to complete strangers on a message board. Not only is it not proper, it ain't fucking right. I don't know you, how old you are, what your goals are, what your tolerance for risk is or anything else about you. Anyone who says something to the effect of "You should invest in XYZ Stock (or fund or Gold or whatever) is someone who should be IGNORED. I put up a thread about this subject in the Investing Group 13 months ago. If you read my post, you'll get my point. The only respondent to the thread is someone who I have great respect for and is someone I have had private conversations with, but the thread went no further than those three responses.

It is my experience that the poster I responded to above - "Olney Blue" who said;

I have not changed my allocations in 20 years- wish I had a strategy at all..... because I'm entirely at the mercy of the stock market! -- (emphasis mine)

is not alone. It is a HUGE failure of our public education system in this country that this person and her experience is common. It is a most unfortunate circumstance that Olney Blue has never changed her allocation. The reason for this is, I'm sure, partly due to the lack of education available or promoted to individuals like her so that they are prepared to make what can be life altering financial decisions. Decisions as simple as when to go to cash and when to buy into an equity fund, how much into Bonds and how much International, etc. Many, many 401(K) plans provide qualified professionals so the participants can have a face-to-face conversation with them and discuss such things. Millions of Americans have not taken advantage of that service. Other 401(K) plans offer such a service but then don't provide it readily. This is a HUGE problem in the industry and it has bred the mistrust evident on this and many other threads on DU.

Hell, there are plenty of people willing to give you great tips on Democratic Underground. There are plenty of people who regularly put up posts encouraging COMPLETE STRANGERS to buy this or that. They all want you to think they have the market by the tail.

Not me, man. No fucking way.

The thing is, most people need professional guidance. Most will benefit from it. Few want to actually have to pay for it. For those people who think they shouldn't have to pay for it, think they don't need it and feel they can do as good or better without professional help, all I say is go for it. Have at it. But the fact is, the average retail investor (that's you and everyone else who does not run a Mutual Fund or a Pension Fund or some such) may indeed do well, but wealthy people - those that have money - hire people to manage it for them. The idea that merely because a person only has $25,000 in an IRA or a 401(K) or that they can invest in no-load funds at Vanguard or Fidelity or Dodge and Cox and that means they don't need advice is ridiculous. Those people are more often than not the ones MOST in need of personalized advice. Unfortunately, with many 401(K) and 403(B) programs, the advice comes infrequently or not at all and with the major no-load fund families, the advice comes with either an extra fee or from a different person, none of whom know you from Adam, each time you call.


My recommended allocation? Find yourself a qualified, licensed and registered Financial Professional in your area you can truly TRUST and talk with him or her about this subject. Asking for and taking specific investment advice on a public message board is foolish.

[spooky3]

104. I don't disagree that in some circumstances professional investment managers

are worth every cent and that many people want something for nothing.

What seems worthy of criticism to me is to claim on a public message board, in 2008 that everyone should have averaged 10% per year over the past 10 years - and then when challenged, make fun of posts on public message boards.

[A HERETIC I AM]

107. I did not say "should have"

I said;

There is no reason in the world why one could not have averaged a 10% annual rate of return for the last ten years, if properly diversified, sector weighted and allocated across the various asset classes.

People "should" have made what they were comfortable making within the realm of realistic market possibilities.

If it appears that I made fun of any posts on this thread, I apologize. That is not my intent at all.

[Median Democrat]

108. Well, Just Asking For An Explanation

I thank you for your concern that I might actually invest 100% of my assets in one asset class. I don't, but I do appreciate your concern. That being said, I am just curious about your statement:

"There is no reason in the world why one could not have averaged a 10% annual rate of return for the last ten years, if properly diversified, sector weighted and allocated across the various asset classes."

From your explanation, it seems that the caveat is that you need to retain a professional financial planner to achieve a 10% annual return over the past 10 years, which strikes me as a pretty good reason why lots of folks would not achieve that sort of return. However, lets throw out a couple of diversified mutuals funds.

1. Vanguard Balanced had a 5.22% annual return, and it has a basic 60/40 stock and bond split, which is pretty plain vanilla.

See, returns are typically related to risk, and if you are saying that a 10% annual return was achievable through a properly diversified portfolio, my response is that this is unlikely. Why? Because you would have had to heavily weight a risky sector like an emerging market fund to achieve a 10% annual return.

So, I will give you the advantage of 20/20 hindsight. What "properly diversified, sector weighted and allocated across the various asset classes," achieved a 10% annual return?

Again, thanks the replies.

[pitohui]

114. there is no reason in the world why pigs can't fly

other than that little lack of something called "wings"

some of the other posters are tiptoeing around it, but i'm not embarrassed to call a bald lie a bald lie

a 10% rate of return over the last decade, most of it the bush years, didn't happen, and we can look at the records and we know it didn't happen

don't sell me chicken shit and call it chicken salad

you make a claim, you can't back up your claim, and we all know you can't back up your claim -- you want to sell a service known to be worthless and documented to be worthless by a great many studies, we'd all benefit as much from hiring an astrologer as a financial planner and most of it would actually end up wasting less money if we opted for the astrologer

next question?

[A HERETIC I AM]

117. 559, 105, 34 & 200

559 = The number of Mutual Funds that have 10% or better 10-year average total return, all share classes, according to Thomson Financial Services.

105 = The number of the above 559 Mutual Funds that have 10% or better 15-year average total return, all share classes, according to Thomson Financial Services.

34 = The number of the above 105 Mutual Funds that have 10% or better 20-year average total return, all share classes, according to Thomson Financial Services.

200 = The number of Mutual Funds that have 10% or better 10-year average total return, all share classes, according to Morningstar Fund screener tool.

http://screen.morningstar.com/FundSelector.html

(Leave every category as "All" or "Any", click each Star rating box and highlite the radio button next to "or" on the entry for "10-year return greater than or equal to". Enter "10" in the field and click "Show Results" at the bottom of the page)



Chicken shit indeed.

Have a great day

[spooky3]

54. does your fund company have a "lifecycle" or "target" investment fund?

Those are funds that are rebalanced by the fund manager toward more conservative investments, as you approach retirement. That is probably your best bet, though over the short term, it can still lose money, and when the stock market spikes up, your funds won't rise as high. It also has higher fees than an index fund.

[JDPriestly]

65. Whether holding on while the market tanks is smart depends

on where you are in the investment cycle of your life. If you are retired, you cannot afford to ride the market. You are just sunk because you have to rely on income from investments to supplement Social Security. Right now interest rates are as low as 2%. And no matter how much the dollar value of the stock market rises, the dollar has fallen so much that stock investments are a joke.

Also, there is no point in staying in stocks when the fundamentals of the market are as bad as they are in the US today. Name one industry that is on the rise in the US at this time. The oil companies are making huge profits, but Americans are reaching the breaking point on gas prices.

Face it. At this point, many of the old standard investments are likely to turn very sour. The fundamental economy is changing very quickly. Airfares are so high that there is no way that airlines can continue to operate at a volume that will please investors.

Our lifestyle is about to change. Our society is about to change. Why? Because we have to pay for the Iraq invasion fiasco. The taxpayers and ordinary citizens of our country have been stolen blind since Bush took office. The equivalent of Mafia bosses are in charge now. Honest businesses and honest investors are just fools to be taken for everything they have. This is not an ordinary panic. America's industrial base has been gutted. It's financial sector has been taken for a ride.

At this point, we are pretty much a fast food nation. Sure, we are able to increase agricultural exports due to the dollar exchange rate, but our own military prefers to buy a European plane, and our agricultural exports cannot carry the whole country.

What resources do we still have? National parks (provided they aren't completely devoured by beetles and then end up burning), a lot of superhighways, coal, some crumbling infrastructure? What kind of economy is left? It's pretty grim. Conventional nonconventional investment advice about not selling when stocks are low is just so much hot air. Could stocks go lower? In real value, yes, and they probably will. The only reason to invest in stocks now is the hope that you can hedge inflation -- which, on top of everything else, is rampant and will soon be getting even worse. Sit tight and simplify your life. That's about all Americans can do now.

We need drastic political change -- and soon.

[roguevalley]

52. I pulled my money out and put it into cd's until I finish saving enough

to pay off my house. if the world collapses and the banks whistle out their ass for their money, I can at least take it and buy a loaf of bread with the wheelbarrow that it would take to do that.

[Oleladylib]

2. even the safest investments..unless a simple guaranteed annuity can be lost..

they don't make alot of quick money..but don't lose it either...good luck

[BigDaddy44]

3. You retiring next year?

If not, do what I do. Nothing. It goes up. It goes down. In the long run, over time however, it goes up. I bought a mutual fund in my daughters name when she was born 16 years ago. Spent $2500 for it. Added nothing since. In 2000 it was worth $18,000. By 2002 it was worth $12,000. Its now worth $21,000. It goes up, it goes down. Relax. Time is your friend.

[TwixVoy]

6. No, but I have a feeling

The republicans have managed to change the dynamics of the economy for the next several decades. We are just now starting to feel the effects of the neocons agenda. They have started shit that we can not fix, both here and especially internationally. We are going to lose super power status... I would bet money on that.... and once that happens the time of economic maturity for the country has come to an end.

[BigDaddy44]

8. Then buy international funds

If you think the USA is going in the tank, but a European fund. Or an Asian fund.

[Deja Q]

10. Aren't their stock markets in disarray right now too?

They may not believe "deficits don't matter", but they still need us as much as we need them. Global economy, all or nothing.

[TheFarseer]

73. my international fund is handily beating the domestic

that might be just anecdotal evidence, but I don't think so. European might be the way to go. Emerging markets are on as much of a roller coaster as we are.

[TwixVoy]

12. Emerging market investments

are down even worse than ours.

[TNDemo]

40. I changed all my investments in November.

I was thinking about making it heavily in international funds but ended up going four ways - bonds, prime cap stocks, medium growth stocks and international funds. Of course my bonds are doing best now but to my surprise the international fund has performed the most poorly of all of them since the first day. Can't figure it out but if things don't pick up before too long they may get moved.

[roamer65]

46. I moved to an inflation-indexed Treasury bond fund.

If Treasury notes become worthless, my 401K will be the last of my worries.

[Oleladylib]

15. wow...impressed!

[MISSDem]

19. I think it is called compounding.

Is that it?

[BigDaddy44]

21. Thanks

It should pay for ONE semester of college even!!!! ugh......

[Ilsa]

43. Hey Big Daddy, I was wondering what you thought about

Exxon stock (XOM). I paid in the mid fifties for it several years ago and it is 92+ now. I've thought of getting out of it. I wonder if I'd be selling it too soon. Any ideas?

[eridani]

57. Time isn't your friend if you don't have many years left in your life n/t

[msongs]

4. gotta be in it for the long haul, not just for short cycle ups and downs

CD rates suck, all to bail out corporate and real estate stupid people.

banks punish customers by raising fees and interest charged, while lowering interest paid. IS that a stupid business plan or what? I know our bank has lost quite a few people who are shuffling their savings into whatever better rates they can find...and there's few options now.

meanwhile corporate welfare goes up and up.

Msongs

[DesertFlower]

20. i just posted something about

the interest rates.

[JDPriestly]

67. Once you are over 65, you don't know how long the haul will be.

You might need a to spend a lot of money next year on medical costs. If your money is tied up in stocks that you've held for a long time and that happen to be going through a bad phase, you might as well have never saved a cent.

[pitohui]

112. as eridani points out, there is no long haul

human lifespan is limited and you do not have all of time and eternity to ride out the so-called long haul, if you actually intend to invest for the future in order to buy a house, pay for kids college, or retire, we have only a few short decades of working life and that's it, it's over, no human being lives long enough to enjoy the "long run" in any statistical sense

you can only chuckle (or cry) at such posters who have a religious belief that over time markets are guaranteed to go up

no, markets are not guaranteed to do any freaking thing and they sure as heck aren't guaranteed to do it on your schedule

work your whole life and then retire in august 2001, oops -- and i know some people this actually happened to


people get old and unable to work in every single year, every single decade, none of us has the luxury to decide, okay, i'm in it for the long haul and if things don't go well in the market this decade i'll just put off turning sixty for another 15 years or so

[alstephenson]

5. I lost 10% across the board last quarter...

on my 401(k)s invested in mutual funds. I didn't want to open the quarterly statement - kind of wish I hadn't.

[MISSDem]

7. You have to diversify.

Being in the safest will not do it.

[TwixVoy]

11. Basically I have an option of about 10 investments

All of them have been taking a nose dive since december. Not much ability to diversify in my 401k plan sadly.

[sorrybushisfromtexas]

9. I lost about !5% last quarter.

I just thank God I have a guaranteed teacher's pension when I retire. (That is if Texas doesn't go broke.

[speedoo]

13. I'm curious. What were these safest investments offered?

The S&P 500 is only down about 5% this year, by the way. So going from up 17 to down 23 was not due to overall market performance.

I used to help manage a large company 401k plan, so I am very interested in knowing more about yours. And maybe helping you if I can. Feel free to PM me if you'd rather discuss privately.

[TwixVoy]

18. All of the investment options are either

real estate, small business, international, our company stock, and then "mix" plans that are mixes of those investment options. I had a lot of it in international stock because I felt it would be safer than the national investment options. I was wrong. It took a hit too.

[speedoo]

24. Well that's not an adequate lineup of choices.

Unless there are no employees older than say, 45. No fixed income option is just not satisfactory.

Your only choice IMO is to go for maximum diversification.

Did you put a lot of your money in the company stock option?

[Yupster]

84. I set up 401 k plans

and I use about six different companies and have seen dozens of others.

On every option I use and have ever seen there is always some form of money market option. It's where money goes into if the person hasn't chosen an option either. (This has recently changed though as an employer can now use a middle of the road fund as the default option. -- There is always still a money market option though).

Sadly I have seen plans with a bad mix of investments -- maybe eight stock funds and a money market.

I do not believe that the starter of this thread used his/her safest available options and lost that much this quarter though. I'd have to see that to believe it since I have looked at hundreds of quarterly statements in the last couple of weeks.

[speedoo]

90. Yes, sadly, too many such plans fail to use solid investment basics...

to come up with a lineup of funds. It's one of the biggest failures of the IRA retirement concept.

[MISSDem]

14. It will go back up. Otherwise, the whole world will be in trouble

and no one will care about the stock market because we will be out hunting for our food and building a campfire beside the tent we now live in. Don't worry! Be happy!. But diversify. Never put all of your eggs in one basket.

[lonestarnot]

17. You are optimistic at least.

[DesertFlower]

16. got out of stocks years ago.

hubby is too close to retirement. everything is in a fund called "stable value". since interest rates have been cut, we're making $46 a day in interest. before that we were making near $53 a day. that's over $2500 a year in lost interest.

our bank account interest rate has dropped too.

i know these are hard times for people. we played by the rules -- didn't mortgage too much -- no credit card debt -- put money in the bank. so why are we being punished?

[MISSDem]

25. It you think that way then all I can say is

Life is not fair. Remember Job?

[DesertFlower]

29. i know. i shouldn't complain. nt

[Oleladylib]

27. when you find the answer, sweets..please let us all know..

you are playin' my tune! 46.00 a day shows you saved wisely.

[DesertFlower]

32. well, i'm 66 and hubby is 60.

we weren't so wise when we were young, but you get into your 50s and see that your job might disappear. kinda "shakes you into reality".

[jazzjunkysue]

100. I never was in stocks.

I sleep at night.

[high density]

22. What "safest" investments are you talking about?

I have a nearly 100% equities portfolio and it has not had that much of a swing since December. I have about 40 years to go before I retire so I am anxious to buy some stuff at a discount anyway. Stocks are the only thing on the planet that people are sad to see on sale. The best thing is to set an asset allocation of stocks, bonds, and cash that matches your risk tolerance and the length of the investment. You set that allocation and then you ignore the day to day or month to month swings of the market.

The "safest" investments in 401ks are typically stable value / money market funds which shouldn't be down anything, though most of them currently have negative real returns thanks to the interest rates that have dipped below inflation.

[spanone]

26. i should have got into oil futures, eh?

[BigDaddy44]

28. Vanguard Precious Metals and Mining fund

It's tripled in the last 3 years :)

[Olney Blue]

35. Or the weapons industry.

[slackmaster]

59. I more than doubled my money on Sturm, Ruger & Co. (RGR)

Bought it in 2005 at about $9, sold it in the summer of 2007 at over $18. The key with stocks like that is actually paying attention to what the company is doing. It takes research. Having technical knowledge helps a lot.

[girl gone mad]

33. A lot of the so-called safe investments..

were actually AAA rated sub-prime mortgage junk. State pensions are going to be hit hard. Calpers is already in trouble, with executives strapping on their golden parachutes and bailing out.

[Elspeth]

34. TwixVoy, I remember your thread predicting major trouble in retail

You were absolutely right then. And you are right now. Tying retirement totally to the market is like planting a seedling on a dirt road and hoping a tractor doesn't run over it. You might get lucky and it might grow so big that vehicles drive around it; but chances are, someone's tire is going to crush it.

This said, I thank you for your threads on retail and ask you to keep posting on what is happening.

[limit18]

38. -5.7% since 1/01/08

[Indykatie]

42. 3.4% YTD Result for Mine

but I re-allocated to bonds (PTTRX) and stable GI funds at the very beginning of the year. Not sure I understand how one could achieve a such a large loss when the market has not seen such poor results YTD. I have done quite well in international funds for 2-3 years but they are having a rough year too so far.

[Blue_Tires]

44. k+r

[Lorien]

45. I just sold my IRA

My losses weren't quite as dramatic, but headed that way. I'll owe a huge amount it taxes on it, but I think that it's better to pay off much of my debt before things get much worse.

[BigDaddy44]

47. Why would you owe taxes on an IRA?

Unless you're retired of course.

[Lorien]

48. Capital gains

I'm about 20 years from retirement.

[speedoo]

51. Why did you sell your IRA 20 years from retirement?

Didn't you have to pay a penalty as well as the taxes?

[Lorien]

61. Yes, I did. But my medical debt is killing me

literally. I don't have enough in home equity to pay for any more surgeries (and my health insurance is crap). Since the IRA is nosediving and the debt is only increasing, things needed to level out somehow. What good are retirement funds if I'm dead before I get there?

[speedoo]

63. I am very sorry to hear that.

I wonder if there is some way to get the penalties back. Due to your hardship. Any chance you looked into that?

[Lorien]

64. I thought that rule was pretty much carved in stone

is there some way to appeal the penalties?

[A HERETIC I AM]

69. IRS Tax Topic 558 - Tax on early distributions.

This and related links discuss the exceptions to paying the 10% penalty.

http://www.irs.gov/taxtopics/tc558.html

Your medical expenses have to total more than 7.5% of your AGI.

[Lorien]

80. Thanks for the link!

I'll certainly look into this!

:hi:

[speedoo]

89. I'm glad you have that info now.

I hope you can get some of that penalty/tax money back. I had a tax problem related to IRA's and worked with a tax attorney to get through it. He's in NYC and his fee was quite reasonable.

Depending on how much money you are looking to get back and your other circumstances, you might want to get help from a good tax lawyer in your area. The IRS can be very difficult to deal with.

Good luck.

[speedoo]

87. Excellent! Good work. nt

[flvegan]

50. Shame there's no "Death and Destruction Fund" to invest in.

It's all a crapshoot these days. If you could somehow find a fund that invested only in corporations that capitalized on raping the world, abusing people and occupying nations, you'd be uber wealthy now.

Of course, I'm being sarcastic about the "shame" part. Serious about the rest.

[Jed Dilligan]

55. It's called debt. Borrowing money is a bet against the economy.

[backscatter712]

110. There's an idea...

Form a mutual fund filled to the brim with Boeing, General Dynamics, Blackwater, Halliburton, KBR, and hell, throw in Wal-Mart.

I'm not sure I'd be able to sleep if I put my money in a fund like that...

[alfredo]

53. I got out of the markets because of bush. Glad I did.

[slackmaster]

58. Mine has been up for most years, very much down so far this year

With at least 10 more years to go, I'm not sweating it.

OTOH I did pretty well on gold and silver that I held for 20+ years.

[Toucano]

60. You didn't chose the Slimy Oil Company / Overbilling Defense Contractor fund did you?

See, right there's you're problem all right!

[uncertainty1999]

62. I'm sorry to hear about your 401k situation.

I don't see any way to do well with 401k's etc unless one pays attention to the market - particularly by identifying long-term trends, such as the bull market in commodities (now) or internet stocks (10 years ago). This requires a decent amount of homework and possibly even more luck. Even for those who have the knack to follow the market, their ability to take advantage of these trends might be limited (e.g., employer's plan offers only a limited variety of mutual funds).

PBS Frontline had a show on 401K's some time ago - it might still be on their website - one fact I learned from that show is that there's a huge disparity as to which types of workers do well with 401K's versus not (and it does not take an MBA or a Ph.D. engineer to come up with the correct answer).

[NuttyFluffers]

68. group hug!

i don't have a retirement plan or enough money in SSI -- and i'm an old geezer (i'm over 21)! you're ahead of the game compared to me! :D

there there, it'll be all better... someday.
:grouphug:

[hack89]

70. Do you get a company match?

if so, you are still ahead of the game.

[mvccd1000]

71. Not mine.

Down about 3% for the year, but still up close to 20% in the last three years.

I'm certainly not getting rich, but it's doing better than a money market or CD.

[BulletproofLandshark]

72. Down 4.5 % last quarter

[fed_up_mother]

74. I decided I'm just not looking at it. :(

We're very diversified in the safest investments we could choose, but - what the hell - nothing is safe.

I told my husband I just wanted to stay ignorant this cycle. My blood pressure will thank me for it.

[mainegreen]

75. I'm up 3%.

:shrug:

[slackmaster]

78. Certainly possible if you bought in the Transportation sector, foreign stocks, or some kinds of bond

:hi:

[Ganja Ninja]

76. We started a new plan last September.

I was able to invest in a natural resources mutual fund, mostly oil and gas and mining stocks. Since then I'm up 19%. But now I'm nervous. A lot of the fund is in oil and gas which I think is over speculated on right now, so I'm thinking of moving before it drops off.

[Bettie]

77. If you are not very close to retirement

Your losses will probably reverse over the next few years.

Long term investements tend to move up over time, so just give it a little time and you'll be in better shape.

Moving investments now just locks in your loss.

[slackmaster]

79. Dollar-cost averaging really smooths things out for people who are working and contributing

I think the probability of losing over the 10-year haul is minimal.

[Median Democrat]

81. The 401(k) Concept Is Flawed

Don't get me wrong, I contribute as much as I can to my 401(k), and I think it is personally great for me. However, as I think that it is flawed as mechanism to address the retirement needs of most Americans. Most studies on 401(k)'s show that most Americans don't use them or don't use them to the full extent that they can. Instead, money that can go into a 401(k) is used for basics like housing or food, or consumer goods. Of course, Republicans will then just cluck their tougues and say it is the fault of American workers for not saving.

However, that is the problem of the 401(k). It has become a tool for companies and politicians to avoid responsibility for the retirement crisis facing American workers. Less and less American workers benefit from pensions. Even public employee pensions have come under severe attack. Likewise, instead of fixing social security, politicians want to add more bells and whistles to 401(k).

The idea I like is to restrict the amounts payable going forward into 401(k)s, and apply the tax difference to fixing social security. This is sacriligious, I know, but the simple fact of the matter is that 401(k)'s have fallen far short of their promise of displacing traditional pensions as an adequate means providing income to retirees. First, 401(k)'s are not fully utilized. Second, as the stock market gyrations leave a significant portion, if not most, of a retiree's savings subject to the gyrations of the market. What happens if a significant portion of workers approach retirement age at the beginning of a long bear market? Well, they can defer retirement, but that kind of undermines the security of saving for retirement.

[backscatter712]

88. Mine have been bleeding for some time now.

I've got some of my 401k in normal stock funds, and I've been investing more in international funds.

I try not to look at them too much - hopefully the diversity inherent in mutual funds will make sure that at least some of the money is saved, even if half the stocks on the fund collapse completely. It's retirement money, and chances are I won't be looking at cashing them in for 30 years, so hopefully something will recover by then.

[Dorian Gray]

91. That sucks?

What did you have your money invested in?

I've had my IRA for about ten years, and it's taken a hit in the last 8 months, but I'm still doing pretty well. But, it's very well diversified. (I own about 6 different mutual funds in it in my IRA.)

[enid602]

93. increase

I 'Bush-proofed' my IRA on 11/7/04 by moving 65% of my assets to non-Dollar equity and bond mutual funds. My portfolio is up by 10% over last year, but the remaining dollar assets are down by 6% on average.

[LSK]

94. are you retiring today? tomorrow? this year? in the next 10 years?

If not, don't worry about it.

PS Mine returned -0.05% lst quarter, I have 25% in international.

[leftofthedial]

97. Capitalism is a fool's game.

It's like playing slot machines for a living. The only ones who win are the house.

[backscatter712]

109. The odds are a bit better than in Vegas, but yes, it is a gamble.

Personally, I stick to mutual funds - better to have your money spread out among hundreds of companies - that way if one tanks, or even a bunch of them tank, I'll lose some of my money, but I won't lose everything.

And generally, if you invest in a good index fund like an S&P500 index fund, those funds have historically gained an average of 11%/year, even if you count in the years of the Great Depression.

Like I mentioned earlier, I don't anticipate touching my money until I retire in 30 years, so for me, it's nothing but numbers - they go up one day and down the next, but over the long-long-long term, they tend to trend upwards.

It's still a risk. If I was closer to retirement, I'd be invested in bonds and bond funds and other very conservative investments - they don't make as much money over the long term, but the bonds won't tend to tank hard like stocks will when the economy craps itself.

[leftofthedial]

116. back when capitalism was somewhat regulated, it was a gamble

now, though, in the post-raygun laissez faire era, when even "democrats" are unrepentant corporatists, it is a sure losing game except for the top 1 or 2%.

[B Calm]

99. and the REPUBLICAN ECONOMIC DISASTER continues. . . .

[crimsonblue]

106. Anybody who has many years of investing ahead of them should switch to a Roth IRA...

It is pretaxed, and any gains taken out upon eligibility are tax free. Plus, you can take money out for certain things such as a home, medical needs, or other "approved" emergencies. I highly recommend it to any and everyone with 15+ years of investing.

Disclaimer: I am not a financial adviser and am not offering advice to anyone.

[JCMach1]

111. I have a significant percent in energy...

so I am doing fine... Using some of those profits to roll into distressed bank stocks at the moment.

However, the non-energy part of the portfolio is, well, pathetic.

[KharmaTrain]

115. Sounds Like You Need To Have That Portfolio Rebalanced...

It's sad to see these stories as I've known many others who also have seen their pensions and savings take a big hit. First of all...remember, it's all on "paper". What one loses, one can and will regain in time.

Last year, I saw how bad the economy was going and heading and dumped a lot of stock I had (and paid in captial gains this year) and then put the money into CDs...locking them away at a guaranteed rate for at least a year (I'll probably extend them)...as a hedge for what I saw coming. Most funds have a money manager who is supposed to watch your 401 and make similar adjustments...if you have a fund contact, I'd call and ask them what gives and see if you can get into more guarantteed investments rather than ones that continue to be tied to the market or the economy.

My remaining stocks took a big hit the first quarter...at least down 15%...but the market has been slowly creeping back up since (It's almost back to 13,000)...so hopefully you won't see as big losses in your next statement.