Took my balance in my 401K program out of all stocks, bonds

[rhody]

So far, my decision to move funds totally out of corporate and all stock funds has proven wise. In a https://www.physicsforums.com/showpost.php?p=3421926&postcount=58", the Washington Times reporter said:

the pipsqueakery of the politicians,

well, we squeaked that one by now didn't we, the political powers that be deftly put off some future hard decisions to a panel of six republicans and democrats who will hammer out cuts in the future. Very nicely freeing up those who otherwise would be held accountable. What a beautiful thing, you get to have your cake and eat it to. For the record the stock in my company has dropped around 7% since I moved the funds out around two weeks ago. Will see how things go as time progresses and report back every quarter.

Rhody...

 

[Borg]

DOW was down 500 today! I am so glad that I finally missed one of these and I don't think that it's over either. They still haven't decided on whether to downgrade the US.

 

[rhody]

DOW was down 500 today! I am so glad that I finally missed one of these and I don't think that it's over either. They still haven't decided on whether to downgrade the US.

Rhody & Borg breathe a collective sigh of relief... Now if only Rhody wife had listened to me weeks ago, she would be too... Sadly she choose to IGNORE the warning and now hand writing on the wall...

Rhody...

 

[Proton Soup]

maybe invest in Dollar General, Big Lots, and other dime store salvage centers.

 

[Drakkith]

DOW was down 500 today! I am so glad that I finally missed one of these and I don't think that it's over either. They still haven't decided on whether to downgrade the US.

Sounds like I should start buying stock soon.

 

[drankin]

Sounds like I should start buying stock soon.

When this settles out stocks will be on sale!

 

[Drakkith]

When this settles out stocks will be on sale!

Woohoo!

 

[Tosh5457]

Gold is a finite commodity and it WILL crash soon. If you have any substantial holdings, now would be a great time to bail out because it will soon be untenable, especially if you bought within the past year or so.

I don't think so, and you don't have any evidence to back that up. I don't see any distribution in gold, and the USD index doesn't show much strength either.

When people think the worst of the market, it makes a bull run.

Even if everyone looks bearish, markets can still drop a good amount of points before it turns up.

C'mon, to trade you need knowledge, just like you need knowledge to be a physicist or a mathematician. Just diversifying and rely on the news to get in or out is a very bad trading plan.

Gold shows supply, but it's not nearly enough to cause a crash, it could very well continue the bull market. On the USD Index (moves inversely to gold) there is some support, but it's near its down trendline. I wouldn't enter long on gold, but if I was long on gold already I wouldn't exit either.

The stock market may be in trouble on the medium term, but either way there was plenty of evidence to get out before this last correction. If you have stocks you should have exited much earlier, so cut your losses already. And for you investing long-term in US stocks I'd think twice... USA is the new Japan economically. If there isn't any major bubble, USA will go to stagnation just like Japan is in for 20 years.

 

[lisab]

When this settles out stocks will be on sale!

Woohoo!

That's the spirit! Especially if you're not going to need the money for a while. I just wish I had more disposable income to buy stock now. Well I am diverting 16% of my paycheck into my 401K, so I'll get a piece of the bargain.

 

[Drakkith]

That's the spirit! Especially if you're not going to need the money for a while. I just wish I had more disposable income to buy stock now. Well I am diverting 16% of my paycheck into my 401K, so I'll get a piece of the bargain.

Yeah, I've had 10% of my paycheck going into a 401k type thing since like 2005 or so. I'm in the military, so its not called a 401k but a TSP, Thrift Savings Plan. I believe it is nearly identical though. And I'm only 27, so I should have a decent sized retirement plan when I hit that age.

 

[turbo]

I'm going to ride things out and hope my mutual fund managers buy like crazed lawn-sale ladies when stocks bottom out. I can't realistically hope to start pulling out my principal for maybe 10 years or so, and I hope we have some actual adults in DC by then.

 

[Jack21222]

When people think the worst of the market, it makes a bull run.

When people thought the worst of the market, it crashed 10% lower from the time you made this comment.

 

[rhody]

http://latimesblogs.latimes.com/money_co/2011/08/dow-down-633-points.html"

I can't understand why people are so shocked by this. I am within ten years of retirement, back about 13 years ago another company Raytheon, had their stock value plummet by over 60% to 25 $ and change a share. Today, it closed at 39.41 $ down 1.89 $. The stock has NEVER recovered in those intervening 13 years. My stock has dropped over ten bucks a share as well.

If the market's correct themselves and investment comes back, then you will see the stock price come back, however, I cannot afford to take that chance this time. Young people should not be so concerned, but when it is your retirement savings if you have half a brain, you had better be.

Rhody...

P.S. FYI. http://online.wsj.com/article/SB10001424053111903454504576493062552222944.html?mod=googlenews_wsj"

 

[rhody]

On a positive note, for creative thinkers among us, back in 1980 I had a car loan for about 5200$ and was a renter. Had I somehow secured a loan for 10,000$ and bought Microsoft stock, and paid off that loan and held onto the stock. I would be worth more than a million dollars from that one transaction alone. Never give up on your dreams, friends. There are always creative ways to make them come true.

Rhody...

P.S. Looking back at the situation, I could have done it, but didn't have the courage to do so, so as they say without risk there is no reward.

 

[turbo]

Well, as I said earlier (since stock-trading is not one of my skills) I hope my mutual-fund managers buy like crazy lawn-sale ladies as stocks bottom out. I spent a lot of time with my financial adviser at Principal figuring out how to diversify, so I have a wide range of holdings in US, International, Pacific, etc funds. As panics drive prices down in stocks in each of these markets, I pray that the managers buy up quality stocks so that I can fully recover from the Bush recession. Hopefully, the Fed will raise the short-term interest rates too, since I planned to live off the interest on my money-market accounts. My wife's family is very long-lived, and I want to retire on interest and dividends so that she won't have to touch our principal for the next 30+ years.

We are well-positioned, but I don't doubt the potential for radicals in our government to destroy our economy, so we have stayed liquid and stable in much of our investments.

 

[rhody]

Well, as I said earlier (since stock-trading is not one of my skills) I hope my mutual-fund managers buy like crazy lawn-sale ladies as stocks bottom out. I spent a lot of time with my financial adviser at Principal figuring out how to diversify, so I have a wide range of holdings in US, International, Pacific, etc funds. As panics drive prices down in stocks in each of these markets, I pray that the managers buy up quality stocks so that I can fully recover from the Bush recession. Hopefully, the Fed will raise the short-term interest rates too, since I planned to live off the interest on my money-market accounts. My wife's family is very long-lived, and I want to retire on interest and dividends so that she won't have to touch our principal for the next 30+ years.

We are well-positioned, but I don't doubt the potential for radicals in our government to destroy our economy, so we have stayed liquid and stable in much of our investments.

Good for you turbo, I hope you succeed in your strategy.

Rhody...

 

[turbo]

Good for you turbo, I hope you succeed in your strategy.

Rhody...

Me, too. I was earning lots of interest on the MM funds until the jerks running the Fed kept dropping the short-term interest rate to satisfy Wall Street. That stinks! Much of the shift of wealth from the middle class to the wealthy was accomplished via the Fed's actions in keeping money cheap for speculators. This crap has not been properly addressed by the current administration, though you can find blog posts by Robert Reich explaining how this theft was engineered.

 

[Jack21222]

I wish I had money to invest as this market bottoms out... Any extra money I get goes to paying down my home equity line of credit. It's only 4% interest, but it's variable rate, and if they ever start bringing interest rates back up, I want to have that as low as possible.

 

[rhody]

On a positive note, for creative thinkers among us, back in 1980 I had a car loan for about 5200$ and was a renter. Had I somehow secured a loan for 10,000$ and bought Microsoft stock, and paid off that loan and held onto the stock. I would be worth more than a million dollars from that one transaction alone. Never give up on your dreams, friends. There are always creative ways to make them come true.

Rhody...

P.S. Looking back at the situation, I could have done it, but didn't have the courage to do so, so as they say without risk there is no reward.

I wish I had money to invest as this market bottoms out... Any extra money I get goes to paying down my home equity line of credit. It's only 4% interest, but it's variable rate, and if they ever start bringing interest rates back up, I want to have that as low as possible.

Jack,

Keep my suggestion in my previous post in mind, even if you need to borrow the money, consider paying off the loan an investment, if I had done the same thing with google stock I would have been wealthy, its stock http://quotes.nasdaq.com/asp/SummaryQuote.asp?symbol=GOOG&selected=GOOG". Amazing, huh ?

Rhody...

 

[Borg]

Ah, here's the reason for the drop!

 

[FlexGunship]

I understand that there's no correlation but, it seems like the market always drops when we go on vacation.

Stop going on f***ing vacation! I'm trying to save for retirement here!

 

[Borg]

Stop going on f***ing vacation! I'm trying to save for retirement here!

It wasn't me, it was the Smurfs.

 

[rhody]

OK, a couple of folks who jumped out of stocks just jumped back in in the past few days. it will be interesting to see if in a few weeks or a month if they made the right choice.
Stay tuned, there will be plenty of screaming and gnashing of teeth if they made a bad call, and you will hear first, I promise, hehe...

Rhody...

 

[rhody]

Approaching the two month mark, in another week and a half or so, and the stock price is still down over 12%, it has dipped as low as 15% of the below the price I sold it at. My trepidation and decision to sell was well founded, at least in the short term.

Now the trick is, if you are going to jump back into the market, under what conditions do you pull the trigger ?

Rhody...

 

[Borg]

Approaching the two month mark, in another week and a half or so, and the stock price is still down over 12%, it has dipped as low as 15% of the below the price I sold it at. My trepidation and decision to sell was well founded, at least in the short term.

Now the trick is, if you are going to jump back into the market, under what conditions do you pull the trigger ?

Rhody...

Well, now that I'm back from vacation...

Seriously though, I'm still not sure that it's over. My original two main worries (the Euro and the US budget cuts) are still iffy. I don't see any good news on either front - just more disagreements and squabbles.

As far as the Euro is concerned, I don't think that any country with a stable currency would be willing to become a Euro member right now.

The US budget is supposed to be cut by 1.5 trillion in the next few months. What's going to happen when that hits the fan?

 

[Alfi]

Personally, I don't play the money game. So I am just an observer to the game.

All I know is, we have not lost anything through my wife's ( and her adviser ) choices over the last ten years.

I did buy a couple of gold pieces as a gift for her at ~100 an ounce.
I just liked the sound of them chinking together. they stay in a safety deposit box now :(

All this stock stuff ... it's not the same as making money by the sweat of your brow or the strength of your back.
It's sitting back, doing nothing, and hoping your money is worth more.

 

[rhody]

Almost the end of September and my stock price just went down another 3 dollars, that puts me a little over -20% since I got out of it, the end of July. Rough numbers here, about 10% average drop per month since I got out. I predicted (to myself at least) that it would not exceed -25% in the next year or two, let's see if I am a nobody or suddenly the luckiest economic expert on the planet. Let's see how the numbers run from here, shall we ?

If I trust my predictions then, the 20 - 25 percent range would be a good time to jump back in, no ? I don't need to worry about short term withdrawal for a number of years so I am OK there as well.

Rhody...

 

[rhody]

I just checked the stock price today and it is down about 14% when I put the funds into fixed this July. From the scary look of the US economy with the super committee's failure to reach a compromise and 2012 being a presidential election year, and the weakness in many countries currencies in Europe, I don't plan on getting into stocks again until possibly Q2 of 2012.

However, my gut tells me to wait it out till Q1 of 2013 after the next election cycle. Obviously I want to get into it at the bottom and ride it up again. I figure one more ride up in the market and I will be out for good, I have a target percentage return in my head, and once I reach it I will lock into fixed for good. Let's see if these predictions were are or full of ... a year and a half from now. For those who are in the 10 year countdown range from retirement, what are your plans ?

Rhody...

 

[Borg]

I'm still sitting also. I was nervous last month when the S&P went to 1275 but, I continued to hold off.

I've been spending a good a good amount of time watching daily market news coverage. I originally expected that Greece and Italy would require some fiscal intervention and that the markets would eventually move on. But, now there's Spanish bond yields hovering over 6%, France's AAA rating in danger and finally today's weak bond auction in Germany. Definitely doesn't seem like a time to jump in.

 

[rhody]

WSJ: How to Make Your Nest Egg Last Longer

Those who stick to the convention of annually spending no more than 4% of their initial retirement savings—adjusted each year for inflation—can "use the tax code to make their portfolios last up to seven years longer," says Baylor University Prof. William Reichenstein, a principal at Retiree Inc., a Leawood, Kan., company that helps retirees plan tax-efficient withdrawals.

How It Works

For simultaneous withdrawals to work, retirees should have at least two of the following three types of accounts: regular tax-deferred IRAs and 401(k)s; tax-free Roth IRAs and 401(k)s; and regular taxable accounts.

The first step, he says, is to put off claiming Social Security. A delay will increase their future benefit and reduce the amount of those benefits subject to tax.

In the interim, Mr. Barber says, the couple should withdraw the $70,000 from the taxable account. At that rate, the $300,000 account will support them for about four years.

To see why, consider what will happen in four years, when the couple drains the $300,000 taxable account. At 66, they will qualify for a combined $44,000 in Social Security—or 33% more than they would have received at 62, says Mr. Barber.

From a tax perspective, a bigger Social Security benefit is good news. Why? The formula that determines how much of an individual's Social Security is taxable counts only half of a person's Social Security income. So, in contrast with income from a regular IRA, "you can receive twice as much Social Security income before you ever trigger a tax" on your benefits, says Mr. Mahaney of Prudential.

The couple is also likely to reap future tax benefits. Thanks to the Roth conversions, their tax-deferred IRAs will be smaller. Thus, when required distributions from those IRAs begin at 70½, the withdrawals—and the taxable income they create—will be lower. And tax-free Roth withdrawals can supplement income in years in which tapping other accounts would push them into a higher tax bracket.

The math is sticky, but the benefits can be large.

Is anyone following this thread already using this strategy ? Are there any pitfalls not covered in the quoted text or the article ?

Rhody...