Originally Posted By DyGDisney Okay, my dh has a 401K from an old job he left 3 years ago. He hasn't ever transferred it over, but has a new 401K at his current job. I swear, he has the same money in it now as he did 3 years ago. The stock market being the way it is, we've lost $2,000 in just the last couple of months. We aren't super financially savvy when it comes to stocks/bonds/money market, but I was hoping for help from someone out there who is. Any ideas?
Originally Posted By RoadTrip If you are at least 3-5 years from retirement I'd stick it out. I think most informed people would say the current market will be nothing but a bad memory 18 months from now. Personally, I think once Bush is out of office it will get a real shot in the arm. I only pulled out of my mutual funds because I am just 10 months from retirement and couldn't take the chance.
Originally Posted By DyGDisney Yeah, he's like 20 years from retirement. I need to get a job (someday) with some retirement also. That would help!! When my kids are older........
Originally Posted By fkurucz According to the Mogambo Guru (AKA Richard Daughty) you should cash it out and buy precious metals, because central banks around the world are printing money like it was toilet paper, which will lead to very high inflation.
Originally Posted By Mr X You can, I believe, include precious metals in an IRA portfolio if you wish via exchange traded funds (like the one for gold...gld). There are some strange tax consequences though if you profit and cash out, rather than tax it as capital gains they tax it as some other weird thing (rare collectibles or something). But that's only if you profit anyway, so of course you don't "lose" anything if you invest in metals and the bull market continues...you just pay more in tax. Anyway, that would make more sense to me if you want to buy metals (assuming you're not just wanting physical gold in preparation for doomsday or something lol) rather than simply "cashing out", since there are heavy tax consequences associated with breaking open your IRA piggybank that would probably not be worth the cost (just my opinion, of course), even if metals DO continue to rise for a while.
Originally Posted By SuperDry <<< You can, I believe, include precious metals in an IRA portfolio if you wish via exchange traded funds (like the one for gold...gld). There are some strange tax consequences though if you profit and cash out, rather than tax it as capital gains they tax it as some other weird thing (rare collectibles or something). >>> Are you sure about this with respect to a retirement account? One thing about retirement accts is that all withdrawals from them are taxed as ordinary income (except for any after-tax contributions), regardless of the source of the money: whether it be withdrawal of tax-deferred income, capital gains, or qualified dividends, they all get taxed as ordinary income when coming out of a 401(k) or IRA.
Originally Posted By Mr X Nope, not sure about that at all. I'm sure you know better than I. The only reason I heard about it at all is because someone was complaining over on a gold bugs site about such taxation (so the conversation didn't involve an IRA I don't think). Thanks for the clarification.
Originally Posted By Sport Goofy The DJIA hit 11,000 for the first time back in May 1999. Today, the index is essentially in the same place. The S&P 500 has essentially done the same. So, the "long term" investor over the past 9 years hasn't fared too well. Factoring in for inflation, "long term" investors have lost money during the past decade. Looking ahead, its not particularly encouraging. All economic considerations aside, which are not good, stock markets have a huge demographic problem that will complicate any price appreciation in the future -- ranks of Baby Boomers withdrawing funds from 401Ks, IRAs, and other investments to pay for retirement. The massive outflows of money form retirement funds that have been invested in stock markets will certainly hurt demand for stocks and further suppress prices. You could have earned more in a money market fund during the past decade than the stock market, and that trend is likely to continue for the foreseeable future. That being said, stocks are probably oversold for the near term and there is some opportunity to make money as things bounce around off lows during the current financial crises. For the long-term, I don't think there are all that many opportunities out there for the small investor. Wall Street will continue to take your money and provide minimal returns.
Originally Posted By Fe Maiden The first thing I might look at doing is rolling it over into an IRA, 401Ks can have additional costs and fees that you can eliminate even if you went with advisor sold funds such as American Funds. The other potential benefit is that the old 401K your husband has may have limited/lousy choices. With an IRA virtually any investment can be used. When people ask me what I do, I tell them I manage money, manage risk, and manage emotions. The basic rule of investing is buy low and sell high. Everyone knows it yet no one does it. Investor emotion plays such a huge part in the types of returns you will see. There’s a formula I use which states “investment performance x investor emotion = investor’s return. I was at a compliance meeting a few weeks ago and they had great stats on how people approach investing. I’m only going off my notes here so I don’t have a link to anything, but I’ve been in business long enough and have been told by enough people that they were going to hold off investing with me until the market came back that it’s accurate. The first stat showed the average annual return of the S&P500 from 1987 to 2006 was 11.8%. The average return of individual investors over that same time was 4.1%. How can that be? The S&P is always invested, yet most people when things become scary move out of the market only to go back in when things have gotten better (in other words, too late.) It was better for those investors that employed dollar cost averaging; their return was almost 7%. The other stat was in the year 2000 the Dow over a 21 day period reached its high point and investors put in 50 billion dollars which was an all time record. In Sept/Oct of 2002 the Dow bottomed out at around 7200 and over 21 days 50 billion dollars (also a record) came out of the market. Where did all the money go? I don’t know, since it was 2002 and houses in my neighborhood were being sold even before there was enough time to put up a “for sale†sign, my guess is it went into real estate. Another great example of buying low and selling high. <<I swear, he has the same money in it now as he did 3 years ago. The stock market being the way it is, we've lost $2,000 in just the last couple of months.>> The client I hear from the most (my wife) just maxed out her 401K for the year and on the surface she has very little to show for it. She's invested 15K and her account value is less than it was in December. But there's one thing on her statement that's gone up every quarter and that's the number of shares she owns and since your husband is many years from retirement that’s what you have to focus on. A lot of what I say may sound pie in the sky to a lot of people, but it’s all going on the assumption that you have a sound financial plan and you employ basic principles of investing like diversification and asset allocation.
Originally Posted By RoadTrip <<The DJIA hit 11,000 for the first time back in May 1999. Today, the index is essentially in the same place. The S&P 500 has essentially done the same. So, the "long term" investor over the past 9 years hasn't fared too well. Factoring in for inflation, "long term" investors have lost money during the past decade.>> We are in a bear market right now due to the price of oil and the mortgage mess. That will straighten itself out over time. Don't forget that the DJIA was over 14,000 a year ago.
Originally Posted By fkurucz <<Anyway, that would make more sense to me if you want to buy metals (assuming you're not just wanting physical gold in preparation for doomsday or something lol) rather than simply "cashing out", since there are heavy tax consequences associated with breaking open your IRA piggybank that would probably not be worth the cost (just my opinion, of course), even if metals DO continue to rise for a while.>> Some gold bugs (including the Mogambo Guru) insist on taking physical possesion of the prescious metals. <<We are in a bear market right now due to the price of oil and the mortgage mess. That will straighten itself out over time. Don't forget that the DJIA was over 14,000 a year ago.>> The $64,000 question is: how long until things sort themselves out? I think that if the gov't keeps trying to "save" people who bought houses they can't afford (and the lenders who funded their mortgages) that this could take a very, very long time. Anyway, we should all congratulate each other, as we are all about to become "players" in the mortgage disaster. It appears almost certain that taxpayers are going to be left holding the bag for losses at Fannie Mae and Freddie Mac. Our new national motto should be: Privatize the gains, socialize the losses. Of course, it should be in Latin.
Originally Posted By queenbee One of the worst things you can do, in my opinion is put the money in advisor sold funds. In most cases the fees are so high you will never recoup your money. Sport Goofy is right, Wall Street is not a charity. The best choices are Vanguard and Fidelity for low cost IRAs. They both offer several no load(fees) funds, with low minimums and no annual maintaince fees. Using either of these companies will allow you to employ the stratagies outlined by the previous posters. Check out www.bankrate.com for a good primer on these low cost brokerages.
Originally Posted By fkurucz <<The client I hear from the most (my wife) just maxed out her 401K for the year and on the surface she has very little to show for it. She's invested 15K and her account value is less than it was in December.>> If one's employer provides a 401(k) contribution match one should take advantage of it, especially if its a 1 to 1 match. I can't believe how many people leave this free money on the table.
Originally Posted By Sport Goofy <<We are in a bear market right now due to the price of oil and the mortgage mess. That will straighten itself out over time. Don't forget that the DJIA was over 14,000 a year ago.>> Even at 14,000 the returns on the DJIA have been meager since 1999. If you bought at the lows after 9/11, you've seen some gains in the past decade. If not, you are just treading water for the most part. The U.S. economy simply doesn't have much to power it forward in the years ahead. We have waves of retirees leaving the work force and shifting to fixed incomes that are only a fraction of what they earned in their working years, increased spending on medical needs that won't go towards other items in the economy, plus the problems with growing government debt and entitlements that have to be paid for at some point. There isn't much of an engine for growth in the U.S. economy anymore. The idea that stocks always go up (or that the value of houses always goes up) is going to be severely tested in the years ahead. Historical performance is not always an indicator of future performance. Too many variables.
Originally Posted By Fe Maiden <<One of the worst things you can do, in my opinion is put the money in advisor sold funds. In most cases the fees are so high you will never recoup your money. >> Sounds like this was taken directly from the pages of Consumer Reports. Of course as someone who uses advisor sold funds I'd disagree. But so would about a hundred or so families that I have worked with over the years that have been able to retire comfortably, send their kids to school, or been able to maintain their lifestyle when a parent or spouse passed away. Not only were they able to recoup their money, they've actually made money as shocking as that might be. I'm certainly not knocking Fidelity or Vanguard as I use them, but not everyone is comfortable going it alone.
Originally Posted By queenbee <a href="http://www.fool.com/investing/mutual-funds/2007/05/08/are-advisor-sold-funds-ever-worth-it.aspx" target="_blank">http://www.fool.com/investing/...-it.aspx</a> You're correct FeMaiden. What I should have said is, it's unlikely advisor investments will perform better than the low cost funds to the point that they can justify the high fees. So, you may indeed make money using advisor funds, just far less of it.
Originally Posted By DyGDisney All right, this is what I'm reading here: "Mwah-mwahhh, mwah mwaaah mwah mmmwaaaaaaahhhhhhhh. Mwah-mwah, mwwaah, mwwwah." It doesn't make any sense to me. Let's pretend this is, "Your 401K in a Recession For Dummies", I'm the dummy, and you guys are all financial genius'!!! So explain it again, only please dummy it down for me!
Originally Posted By Mr X I'm assuming you have a 401K of some sort. What questions do you have specifically? Also, what's your time horizon (if you're using if for retirement, how far off is that...if you're planning to withdraw from it to pay for College or a Home, then THAT would be your "time horizon", or whatever portion of your IRA you are planning to use for different reasons. Very important question right there, impossible to offer any decent suggestions without it.
Originally Posted By DyGDisney My dh has a 401K. He's not contributing to this particular one anymore because he left that job 3 years ago and never rolled it over. Is it too late to roll it over? I think the limit is one year after leaving the job. Also, should he take some of his stocks and put them in money market and bonds? They discourage what they consider excessive trading. Thanks Mr. X and everyone else. It's just discouraging seeing it go nowhere but down in the last 3 years.
