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Sunday, Nov 8, 2009
Dear Middle Class,
Your retirement investments are probably now, or soon will be, toast.
I would cash out the rest, take the tax hit and buy gold (if you can find any to buy). That is the only chance you have, in the moderate term, to recoup your losses. It sure as hell beats playing the market again. Unless, of course, you feel particularly lucky at Vegas or the horse tracks, but I wouldn't recommend it.
Cary, better advice here but, really, the mail CAN ruin your life - at least near term, for some, a long time. See, foreclosure notices come in the mail too. Hell, I hate looking at my own online bank statements but you gotta do it at some time or things just get worse.
And lastly, back in August, I literally got on my knees and begged my mother (trying to recover in an extended care facility) to get all of her retirement investments out of the market. She wouldn't listen to me because (1) she worried what her bloodsucking daughter would do (and that's a whole other story) and (2) like most Americans who have been conditioned to worship at the altar of finance and free markets, she really didn't believe it would happen.
I cashed in my last IRA in August and mom saw her once robust portfolio almost fall by a full half.
Too many people learned too late that Wall Street CAN and will eventually hurt you and that no one really cares if the little guys lose their retirements - hell, that's part of the whole plan. Happens generally ever 50 or so years. The bankster thieves and swindlers get bailed out. You get nothing.
You know that buying CDs or putting your $ into a savings account is "lending money" too, and keeping your assets in cash is "lending money" to the federal gov't at 0% interest, right?
Yeah, but if the government fails, we're SOL in so many fundamental ways that losing money on CDs will seem trivial.
Probably the safest way to save for retirement at the moment is to invest in your health by eating well and working out and plan to work until you die.
Everyone took a hit. It isn't your personal error LW because this has very little to do with your financial decisions. Markets all over the world show volatility. Most likely, your husband is informed and in touch enough to know this.
I can think of a dozen people who lost approximately 3/4 of their investments. Two on the brink of retirement who watched their (vested) stocks go poof.
Only people who are not aware or educated in business and finance would tell you that you screwed up. EVERY market has been affected. Blame and finger pointing going on here won't help when we are all in the same boat. It wasn't your advisor, it's much bigger than that.
So, LW, you are off the hook and don't listen to the crazies.
In this morning's papers
...The U.S. credit card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.
GOOD RIDDANCE. We, the people, can not only survive and thrive without this damned credit, but we AND OUR KIDS AND GRANDKIDS will be BETTER OFF WITHOUT IT in the long term.
They can take their Indian Gifts and their twisted 'playing field', scoop it up and run off to ruIn some OTHER nation.
Frankly, I am at a LOSS as to how ANYONE trusts anyone else on this planet.
This is how these evil clowns run the game. they make like what they offer is critical, invaluable. We cannot live with out it.
All they do is torque up the materialism, nobody STILL have more than anybody else, yet meanwhile they have inserted 'chaotic remote control' over the populace into the game. It is suddenly THEY who have the power over you and me that they lacked BEFORE we let them in the door.
I will live like a pauper if I have to from now on. Frankly, it is and should ALWAYS be the fashion.
Investment banks and many, many, many people who are finance professionals got destroyed by the stock market downturn.
So why are you beating yourself up for not predicting it? How are you supposed to know better than everyone else?
Do you think you're God or something? Why does your husband expect you to predict the unpredictable?
At your age, putting all your retirement $ in CDs has always been a super stupid approach, on a level with stuffing it into coffee cans and burying it in the garden. Your DH's approach is wrong, even though short term it looks smart.
But retirement involves long term investing---25 years, in your case! The stock market will (of course) rebound, if only for the reason that all the politicians have their own wealth based on it. You can bet your sweet life that they will continue passing regulations and bailing companies out until it goes up again.
It's your decision whether or not to tell your husband how much you've lost (although I have to point out that of course you have no real losses because you haven't had to sell yet).
I'd vote for telling your DH though---his reaction will teach you a lot about the longevity of your relationship, so at least you'll have gained some information that may be of use.
Keep breathing. You're fine. You'll be fine. You had paper gains. Now you have paper losses. Nothing is real until it's time to cash out and go home. (BTW, I'm down 27% for the year. I feel your pain when I look at my statements.)
Everybody's retirement accounts are down right now. If you're 65 and retiring in two years, that's a bit of a problem. If you're 42 and retiring in 25 years, it's not a problem.
Do not stop what you're doing. Now is the time to stay the course. There's a strategy called "dollar cost averaging" for retirement accounts. You buy invest the same amount when the market is going up and when the market is going down. Your expensive purchases (when the market is going up) will balance out your cheap purchases (when the market is down), and you'll create a reasonable average purchase price. IF you have a bit extra to spend during a down market, you can improve your average price by buying more when the market is down.
Typically, when the market rebounds it recovers 80% of the value it lost in a couple of months. So... if you just wait, it will get a bit better.
Do not try to time the market. Study after study shows that even professionals do poorly when they're trying to time the market. Amateurs get creamed. Get a sound, market based investment strategy and follow it.
You should check your investment strategy to make sure it's balanced and appropriate for your age. If you are unsure about doing this, various investment groups, like Vanguard, have "target retirement funds" that will balance these issues for you and automatically rebalance your portfolio as you approach retirement. You pick a target retirement fund based on your intended year of retirement. (Target Retirement Fund 2035 is for people whose retirement date is the year 2035 or thereabouts.)
Much of the initial coverage about Fort Hood turned out to be wrong. Is there anything wrong with that?
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Fox News' morning show plays to type, talking about whether Muslims in the Army should face "special debriefings"
219 Democrats and one Republican join in favor of the legislation, which passed by a narrow margin
The survivor and author is upset about comparisons some on the right are making to genocide
Salon headlines in your mailbox
