I'm losing money in my 401k – Whoa!
As many of you know, my day job is in the banking industry. Over the past couple of weeks, I’ve been slowly watching my companies stock plummet. It seems each day brings another significant drop. I don’t pay real close attention to my 401k balance. Typically, the only time I even look at it is when I receive my quarterly statement, or need to update my How To Determine And Track Your Net Worth. Due to the declining market, I decided to take a peek. Like most, I’m losing money in my 401k.
Losing money in 401k
Over the past few months, my 401k value has been slowly declining. But from June to July the value dropped 3.5%. Since this same time last year, my value has dropped 11.6%. While not earth shattering, when you are used to seeing increases of 10% or more each month a 401k value decline of more than the same amount is a bit tough to swallow.
All of my funds are allocated out to high-risk mutual funds with reputable companies like Vanguard and Evergreen. I am not an investing expert, so would rather let these experts handle the investing for me. The track records on both companies have yield good returns in the past. The problem is the down market. Even the best performing funds are hurting right now.
Don’t withdrawal money from your 401k
The big question these days is should you pull money from your 401k or consider moving your money into more conservative funds. That of course is a very personal decision. Since I am fairly young (38) and believe the market will recover I am staying the course. Right now I’m losing 401k money, but my funds are buying stocks at very low prices. Given the market’s history, and the cycles our economy seems to go through, when the economy does finally recovery, the stocks my funds have purchased at low prices should really do well. I am in my 401k for the long term and even though I’m losing money in 401k, I’m staying the course. 20 plus years at least and maybe even more, that of course depends on if my dreams of early retirement come true or not.
If you are older and closer to retire, especially within 10 years than it might be appropriate for you to consider other options like moving your 401k allocation to more conservative funds. Under no circumstances would I recommend pulling money out of your 401k. The penalties and fees just aren’t worth it.
Stay the course
I’ve decided not to look at mine for a while. Given I’ve decided to say the course, it’s just too stressful nor is it reasonable to watch your 401k day to day or even month to month. I recall receiving huge gains in my account during the 90s. Now with our down economy and the continued fall of the markets, we’re seeing a downward trend. It’s all part of the ebb and flow of the market.
I believe it will recover. How about you? Are you making any changes? Are you losing money in your 401k? Share your thoughts my adding a comment.
Photo credit: destinelee