Posted on 07/11/2008 10:44:28 AM PDT by rabscuttle385
The market slump isn't just shredding millions of college funds and retirement accounts.
It's also shredding the financial playbook that many American families had come to rely on to protect and grow their savings.
Think of all the rules and beliefs that worked reliably for decades, and which have been trashed in the last year.
(Excerpt) Read more at online.wsj.com ...
Relevant to GenX/GenY. FYI.
Carolyn
I believe that you made the correct move...as long as you're not in bonds that are at medium or high risk for default within the time frame during which you will be drawing from the 401(k), since it looks like we're in for rough times ahead.
I’m kind of a rookie, but have moved all of my 401k money into the “PIMCO Total Return A” fund which is made up of mostly AAA and AA bonds, with around a 6% 5 year return. I don’t retire until 2036, what do you think ?
Ping list for the discussion of the politics and social (and sometimes nostalgic) aspects that directly effects Generation Reagan / Generation-X (Those born from 1965-1981) including all the spending previous generations are doing that Gen-X and Y will end up paying for.
Freep mail me to be added or dropped. See my home page for details and previous articles.
It’s true that the long term historic trends of the stock market result in steady growth. That’s taking the very long term view. Anybody retiring in the next 10 years or so should be very cautious about stocks. But young people just starting out should be able to ride out market slumps.
And actually, young people just starting out need to get in the habit of saving in the first place. Get that habit installed, and then decide about how to invest. So many younger people nowadays are not giving a thought to the future and not saving anywhere.
The stock market will go back up. It always has. If you had stocks that paid good dividends, you would still be getting 5% or more a year even if they go down.
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Yes, from the top of wall street on down, the rule was borrow and spend, and if you run short, just borrow some more And investment meant shuffling paper or "buying" a piece of property and taking out the equity every couple of years.
Imagine if we had rules requiring saving and investment in productive enterprises - you know, where people produce real goods and real services that other people willingly pay for with cash they earned through their own labor.
The major markets took over two decades after the '29 crash to regain their pre-crash nominal prices. Of course, that's the danger of always going long.
It is a useless habit when you have a berzerko Federal Reserve. What happened to "savings" under Arthur Burns and under Greenspan is just too gruesome to talk about.
The older folks who run the whole place need to get in the habit of living off of current revenue first.
Investors end up being bag holders in this Wall Street game of smoke and mirrors. I have actively traded the market since 1991. I left the profession for which I was trained in 1997 to daytrade for a living. I hold a position over night less than once a month. I was in the market today for a total of 12 minutes. I was short. I made more than the median daily household income in that time. I have not been long since the second week in January. America has been SOLD out by it corporate and political leaders. I would rather make my living betting on America’s brighter future, but that is not the reality of the market place, and that market place is now a global one. I have no INVESTMENTS, the money I do not use as capital for trading is in very vanilla goverment treasuries. My life is good but only because I did NOT trust GOVERNMENT or BUSINESS to deliver on any contracts entered into or promises made.
basically, the old rule was to be a good worker,work hard, never call in sick, keep putting money away and raise your children right and then settle back and enjoy all your efforts because society really appreciates the hard working, tax paying, children raising good guy..NOT!
You ever hear the phrase, “buy low, sell high?”
Well, now it is low. You should buy, buy, buy, buy.
I think you also should do some research on “dollar cost averaging.”
You still have plenty of time to just “set it and forget it.”
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