| Author | Message | ||
     Buellerandy |
Hey Court, I dropped you a pm and was just curious about a comment you made about pulling out of your 401k and would like any wisdom and knowledge you can divulge pertaining to such investments. More importantly, what you suspect will be taking place in the next 60 days. Thanks much. | ||
| Davegess |
I'm nervous about the debt ceiling deal. I have moved into more conservative stocks, less growth, and am trying to get the house refinance again. If the DC doesn't get lifted we are into uncharted territory and not much upsets the markets like uncertainty. Not many investors believe it could happen and I think it is unlikely but some of the freshman in congress do not seem to have any real sense of just how damaging it would be. Decades of having the world's best credit could go down the drain and no one knows what that will mean. | ||
| Moxnix |
Moving out of a 401K to a self-directed IRA may be prudent. However, it takes some time and effort to follow the markets and manage your own money. Remember which of your advisers works on commission and fire them, perhaps find a "by the hour" financial adviser. If your 401K is back to where it was 3 years ago, understand that it was making you far less money for that drop and recovery time and that gap in your money is lost forever. Same with investing in the markets: if you were in at 14 and didn't sell, watched it fall below 10, well, now you are back up to 12. The purpose of Wall Street is to take your money under the auspice of managing it. Remember, these brokers are all bookies and never lose. Just those who place bets with them do. | ||
| Buellerandy |
Yeah, from what I've heard people saying is that they're pulling out of their 401k's. Then when I saw Court make mention of that, I was floored. I'm just trying to figure out how much I lose total by doing it. Cuz if I pull the trigger, I'm just going to buy gold and silver with what I have. That way I won't have to worry about inflation or anything on it. It'll actually have a set value. | ||
| Davegess |
I agree that the money lost is lost but the market goes up and down, i'm looking at a 10 year window, not two year window. In the 40 years I have been saving money for retirement it has gone way up and way down. I don't for a minute think I am better at this than the pros. The guys who run the various funds I can choose from in my 401 are much better at this than me and have more information. I just dropped 2 grand on a fee for service team that is proving a big help on planning how to take this big chunk i have in savings and turn it into a retirement income. for a younger person I am a big proponent of maxing out your 401k in a very aggressive growth fund and let it ride. Trying to time the market is more luck and a fools game. I read an example once of taking $10000 and investing it in the fund that had the biggest returns in the previous year (this was in the go go 90s). Each year you would sell this fund at the end and buy the fund that had just had the biggest gains. Took 10 years to lose all the money. Buy and hold. Trading is very hard and unless you want to spend a lot of time in study it is pretty hard to make a lot of money. | ||
| Buellerandy |
My 401k was started in 2010. I was not burdened prior to that year obviously, but now I'm trying to decide if a more stable foundation is needed i.e. precious metals. I'd rather get out now if things are gonna get that bad in the future. Which of course, no one knows for sure. | ||
| Davegess |
BR how old are you? Gold and silver are not real hot investments. Silver is a real commodity and not very rare. When the price goes up too much folks sell the silver ware and that really retrains the upside price. Gold is at record highs, the idea is to buy low not high. Over a 10 year period it is hard to beat the Dow Jones 500. I decent cheap index fund like Vanguard is a pretty good way to go. If returns are low the expenses wont eat you up. It is possible that you 401 offers a fund like that with low expenses. Also your allowable contribution rate might be higher in a 401. If you do take money out of a 401, be careful. Only take out fully vested money so you don't give up any employee match. Make sure to roll it right to an IRA or you can hit with BIG taxes. Trying to chase returns by listening to the pundits is a bad idea. They all want one thing, more folks to listen to them. A good fee for service planner us what you want. They are hard to find, ask everyone you know. Most planners want to sell you something. Keep socking money away with every paycheck. 10% of your gross into a tax advantaged account and you will be in good shape. Do for a long time and you will like the results. By doing this you only have to hit singles to win, no home runs needed. Singles are easier to get. | ||
| Davegess |
If you are young the ONLY place to be is the American stock market. Folks like Coke are gonna make money long term; it might be in Africa or India but they will make money. The worst 10 years for the S&P showed even, no loss no gain. The worst 20 years showed big gains. You can't say that for gold. Gold is not liquid. Where are you gonna put it? our basement? And if you buy one of these deals where someone else holds it for you what are you gonna do if the shit hits the fan? Drive therethrough the riots and knock on the door? If the Shit really hits the fan gold may be useful for wealthy people but I don;t think you are gonna find many folks willing to trade you gold for food. If you are hot for gold buy some mining stocks. And be really careful with trying to time the market. If ANTONE tells you they know what is gonna happen ask them why they are bothering to tell you? If they could really do that why are they not living on their own private island with the 500 billion dollars they have? Guys predict stuff everyday, once in a while they are right, mostly they are wrong. The weather man does better. | ||
| Buellerandy |
Alright, what I refer to when I say shtf is only meant economically in this post. I'm talking silver/gold rounds. The kind of value that if/when the currency goes to crap, nothing about it will have a value. I'm considering the whole precious metal's idea because if all of my savings becomes crap, then atleast I'd have around 10k in gold and silver to wager when things would get straightened out. Obviously there would be some rough areas in the nation if something like that were to occur, but whatever I purchase would not be in anyone elses possession. Am I making sense or is my communication skills getting fuzzy? (I've had a couple since I got home from work lol). | ||
| Buellerandy |
Crap, missed your first reply. That info helped out a bit. I'll be 30 this year. I know I'm young and I know I don't know squat about investing, these past few years have really opened my eyes a bit. Especially when the house was talking about socializing 401k's into a mandatory 5% of pay just like social security. Since they've proven they had it in mind previously, I assume they haven't forgotten it. (Message edited by buellerandy on July 13, 2011) | ||
| Moxnix |
We bought some gold in 1996 at $350 an ounce, it went down over the next few years to around $290 or less. It's nice to have some around, just in case. Silver is the poor man's gold. Back in 2000 my son, at age 2, inherited some money from his great grandmother. We put it in an aggressive fund with a major investment house. In 2001 the tech bubble popped and we've laughed about it ever since, as it still has not come back to even. We have money in a private bank, which charges 1.5% to manage it. Now, more and more private bank customers are leaving these types of services, as their money is only growing at 3%. Subtract the management fee and one can do better with the money in an index fund. My tea leaves tell me we may be in for 10 years on the doldrums for the US economy. This means there will be innovation in certain new or developing industries. One has to spend time looking in order to find the ones worth investing in. Microsoft comes to mind, starting up in the stagflationary recession of 1975. Three weeks ago I decided to just simply quit working until January, as I cannot foretell what will happen in the Middle East, the Middle Kingdom, Europe or here. Leaving home every morning, I grab the pink sheet or another investment daily at a local market before driving down to a coffee bar in the corner of a motorcycle dealership. One large iced latte served in a Mason jar and the day's economic news from around the world. It's not for everyone, but I worked and sacrificed for 35 years to have a nest egg of which I wish my wife and spawn to keep as much as possible. Easier to pay a fee to an advisor, and we do with some of our assets, but I like the thrill of the hunt. Don't try this at home. Or don't blame me if it doesn't work out. I have opines and am not a licensed adviser. | ||
| Reepicheep |
Put $600 into a Mosin Nagant and 1000 rounds of ammo, and lock it up in the basement. That's the "contingency plan". Then invest the rest. | ||
| Davegess |
I agree with Bill, if your the kind of person to worry about this sort of "worst case" thing do that. Gold is not gonna help you. Gold prices since 1968 when Americans could actually own gold Has climbed from the internationally agree price of 40 dollars (note that when gold was still tightly controlled by governments around the world the price was set in US dollars) to the 1500 bucks today. It has hovered around 300-350 bucks for most of that time with spikes during really bad recessions, 750 back in the late 70's early 80's and 1500 now. That first spike was followed by a return to the 350 range. There is no adjustment for inflation in these numbers. If you bought gold in 1980 at 750 you have now after 30 years doubled you money BUT inflation would have eroded about half of that. Look at this page below. The average inflation adjusted rate of return from 1950 to 2009 is 7%. This include dividends. At this rate you double your money every 10 years in REAL, inflation adjusted, dollars. http://www.simplestockinvesting.com/SP500-historic al-real-total-returns.htm Also look at this. http://www.duke.edu/~charvey/Classes/ba350/history /history.htm The absolute worst S&P period is the Great Depression, if you bought at the absolute peak in 1929 it took 15 years to get your money back. BUT in about 10 more years you had doubled that money. If the US economy struggles, and it may well for quite a while, these big companies will be making money for you in China, India Etc. The real key is to start young and invest 10%, if you can't start there start were you can and INCREASE the amount every few months until you are at 10%. My Wife and I are at 15% now. If you do this you hardly notice it. Keep the money invested! Don't worry over it. It goes up it goes down, It the market takes a huge hit and you pull it out you will miss the next upswing. I can't tell you how many people I know took every out of the market AFTER the crash and are now looking at putting it back. They are a year too late. In the last 6 months I have seen my holdings increase 18%. And if you 401 k has an option to buy your own company stock... buy very little of it. You need a broad based GROWTH stock fund. At your age mostly small companies with a tiny bit of international stocks. Good luck keep saving. | ||
| Buellerandy |
Thats a better explanation for me, thanks Dave. As for the guns and ammo, theres no worries there. I just don't want to spend my working days investing into something that eventually won't be there, or won't be what was promised. Thanks for all the overall input as well. Like I said, I'm still young and I'm more than aware that I don't know nearly enough to base decisions on my own experience and knowledge when it comes to long term finance goals. | ||
| Swampy |
Buy hard ware, it will always hold it's value. A bit bulky, but definitely holds it's value. | ||
| Court |
Dave nailed it. I'll try to add a bit over the weekend but here are a couple important points, gleaned from Dave's comments. START YOUNG - I've got a host of "what happens if" examples I've used on my own sons and some friends. The best is showing the difference between. FIRST SCENARIO - You save $1 per working hour for a year for 10 years starting at age 20. . . . then quit and never save again. SECOND SCENARIO - You wait until you are 30 and save $1 per working hour until you are 65. The amazing thing is that you end up, at age 65, with much more money in the first scenario . . the key is to start early AND that you don't need to save big. CONSISTENCY - Don't try to "chase" things . . that's the domain of the big boys (and girls). My wife has part of a portfolio she does that with in currencies. There are some great gains to be made but you have to be aware that there are also HUGE risks. While some of the chatter about guns, gold and other interesting investments are well . . interesting. . . don't allow yourself to be drawn into trying to be more sophisticated than you are. My advise, and the kids followed it, is to BUDGET savings. If you try to save what's left (I've tried this and failed) you end up with 9 motorcycles and an $1,500 investment account after 10 years. Budget and strive to contibute the maximum annual amount to your 401(K) and go with a good mutual fund. I've been putting the max into things like the Royce Total Return Fund since it's inception. Folks will look as have lots of "well, if you had done xxxx, you would have . . .". Good for them. The key, reading the above, is consistency and time. Once you start to get a sum of money and that money begins to earn interest on interest . . you'll see (and in fact get addicted to) the gains and thank yourself for getting in. You'll be listening to folks tell about their "I shoulda, woulda, coulda" stories as you rest comfortably watching your "ordinary" investment rack in $50,000 a quarter in gains. One of the best personal examples I have is that I had a granddaughter a year ago. The day she was born I set up a facility to set aside $10 per day and invest in the stock of my company (since I get one free share for each 9 I buy and it is one of the top 5 dividend paying stocks in America) every payday. She turned 1 on July 5th and has amassed a nice account. If you want to have some fun . . play with the numbers, make some assumptions and you'll get the point of what Dave and I are saying. If she stopped saving on her fist birthday, never saved again . . when she reached age 65 she'd have more saved than I ever dreamed of. Time and consistency. Start early, have a plan . . even a simple plan "$1 per hour" style if need be . . stick to it. We'll talk more about specifics but while we are talking look at what you are doing and pat yourself on the back, at your age, for the fact that you are doing anything. | ||
| Buellerandy |
Thanks much. |
