Ask the Piggy Bank: What Should I Do With My 401(k)?
Jennifer Hoffman over at My Organized Biz is once again prodding me. This time with a question about the 401(k). When it comes to retirement plans, even in times of economic downturn, the main advice it “don’t panic.”
Many people, in times like this, violate the main rule of investing: “buy low, sell high.” Instead, they freak out and sell low. A measured and calm approach to your 401(k) — and other retirement plans — is what is needed.
First, look at your allocation and compare it to your goals. You may need to do some shifting around, but in general if you have some good value investments, coupled with a few (carefully chosen) growth investments, you should be okay. If you are diversified in your investments you should be okay.
Next, consult with a licensed (fee-based) financial planning expert about your goals and your allocations.
Remember: over time the stock market tends to gain. If you have chosen careful investments, you should be able to ride out the downcycle. Just don’t expect to be making great gains in the next few months — or even years.
Have a personal finance question? Email the Piggy Bank.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional.
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POSTED IN: Economy, Investing, Money advice, Personal Finance, Retirement
6 opinions for Ask the Piggy Bank: What Should I Do With My 401(k)?
Jennifer Hofmann
Mar 18, 2008 at 12:46 pm
Hey, Miranda. Even with your disclaimer, this is great advice. “Don’t freak out - even while everyone else is.” :)
The good news is, I have a great investment plan with T. Rowe Price. I’ll sit back and let them handle it like I have all along.
Good to bear in mind that I won’t be yielding as high interest as I have over the last 5 years. But I’ll breathe and remain calm. Retirement *is* a long-term investment, after all.
Thanks!
miranda
Mar 18, 2008 at 12:50 pm
Yeah. My IRA yield has slowed to a crawl. But I look at it this way: I can afford more shares now. So I’ll have plenty more shares when the market recovers — and that means more retirement $$$ in the long run.
What’s more important is to have your current financial habits up to snuff so that a downturn isn’t so devastating.
Jennifer Hofmann
Mar 18, 2008 at 1:10 pm
“What’s more important is to have your current financial habits up to snuff so that a downturn isn’t so devastating.”
Do I feel another topic coming on? :)
miranda
Mar 18, 2008 at 1:12 pm
Oh my…
Jennifer Hofmann
Mar 18, 2008 at 1:18 pm
(lol) I completely agree about the *great* opportunity presented by this downturn - all the cash I’m contributing right now is slurping up lots of less-expensive shares. I hadn’t thought of that before.
Now if you could just wander over to http://www.myorganizedbiz.com and give ME some topic ideas to write about. :)
Thanks so much for your advice and perspective, Miranda!
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