Money
What to do with your 401(k) in the recession
By: Devona Walker
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Thu, 02/12/2009 - 01:00
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It's hard to get good advice about what to do with your 401(k) in tough economic times. (Read more about 401(k)s.)
These 401(k) programs are administered by companies who have a vested interest in high-risk investing. They are not required to inform workers about fees they accrue, and they have no incentive to guide consumers to safer stocks. In addition, they do not typically notify workers when their 401(k)s have taken a massive hit — like millions undoubtedly have in the last eight months.
What’s worse is the degree of self-serving advice we get. From the likes of Jim Cramer to Fidelity Investments Inc. — the nation’s leading provider of workplace retirement savings plans — these folks are always bullish. Every down day, in their eyes, is a buying opportunity.
Here is the part that really bites. At this point, the best you can do with your 401(k) is mitigate your losses and rebalance your contributions into the most conservative portfolio possible, said Teresa Ghilarducci, an economics professor at the New School for Social Research.
“You reduce consumption in other ways. But you keep your money in a retirement plan. I would suggest government bonds,” she added.
Richard Kaplan, an elder law professor at the University of Illinois, also said workers should look for low-yield, low-fee index bonds. One thing he said is important to note is that workers do not have to play the stock market to invest in a 401(k).
“For many people, 401(k)s and the stock market are correlated. They don’t have to be correlated,” Kaplan said. “The bottom line is ‘Do you think the stock market is a reasonable place to invest, or is it a casino? People should not gamble money they can’t afford to lose.”
Devona Walker is The Loop's senior reporter/blogger. She writes the Post-Race? blog.
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COMMENTS
I worked for a large company for 14 years. Due to a plant closing, I lost my job. They allowed me to leave my money in their 401 K plan. I have $41,000 in it. I can no longer contribute to the plan, but they send me quarterly statements on how it is doing. I have been working for another large company for 3.5 years now and have another 401 K with them. My question is, would I be better moving it to my current 401 K ? If so, how does one do this?
ejaculare precoce
I took a look at the online casino bluebook and it would be a good idea to invest into a casino rather than into the stock market. Since this financial crisis, it requires the mind of a genius to be able to get some money out of the market.
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