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Discussion Starter #1
I have 3/4 in stocks and 1/4 in bonds. I haven't checked it lately, I'm scared to!!

What would it involve to move out of stocks and put more into bonds? I asked my father and he said it's not worth it right now because I would have to sell the stocks. True?

My husband wants me to bail altogether but I told him that's not possible. Is it? I mean, I can't just take it all and put it into a private savings account because I would be severely penalized, right?

Is it possible to put a hold on contributions for the time being? Or would I have to sign back up for everything? I'm going to ask my employer, of course, but I figured I'd ask for advice here first. :) Sorry if I sound totally stupid, but I kind of went into this 401K thing blind....
 

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I do not know your age, but I think you are contemplating all the WRONG moves. Especially if you are young, and lets call that under 50. Now is the time to be putting money into equities. They are cheap. They may not be at the bottom, but seldom does one pick the actual bottom. I believe that we are close. If you have that 10 year horizon (some believe 7 years is enough), there is no reason to dump stocks, and lots of reason to buy. It is a good time to be in equities if you have that 7-10 year of longer horizon.

Stopping contributions? Why? Especially if you don't need the money now any more than you did last month. Keep contributing! Keep buying in cheap?

Pulling the money out, assuming you are under 59.5? You will pay income tax on every dollar you pull out, and then a 10% tax penalty on top of that. BAD IDEA unless in a disparate situation.

Really wish I knew how old a person I was typing at. My 32, 32, and 35 year old kids ask me the same questions. They get the same answers, but with more emotion that I can type with.
 

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With ours you just move your allocations/do an interfund transfer....so if I wanted to put 100% in government bonds, I would just change my allocations to 100% G fund and then do interfund transfer so that all my existing funds vested in my old allocation were then moved to the G also. I don't know what all goes on in that move but for me it would just be a couple clicks. My mom moved all of her to government bonds but that is because she is within 10 years of retiring (she's in her early 50s). I am all invested in stocks because I have 20+ years until retirement and it's a great time to buy.

I think you should continue to contribute no matter what. I am actually increasing my contribution because stocks are so cheap right now. Does your employer offer matching funds? If so, you should contribute at least enough so that you get the matching funds. It's still important to invest in retirement, and the stock market will recover. A 401(k) is a long term investment.
 

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I don't look at our statements right now. :)

I agree with what Allie posted. We are buying up tons of stocks right now, because the prices are down. So when they go back up- we'll be ok. (I hope!)
 

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You can never time the market. By the time you jump from A to B, B has sunk, and you find you should have stuck with A.

Rememeber -- A 401(k) is a LOOOOOONG-term savings plan. The bumps along the way, painful as they are, won't really matter over the course of decades. It's like a kid playing with a yoyo while climbing a hill; the yoyo may continue to go up and down, but the general progress of the kid is the same: UP!

Also -- Making sure you're at the maximum level of employee matches also hedges against market volatilty. Even amid the losses of the mkt, your company's tossing bux in there. Enjoy! ((But DO make sure you're at the max for matching))

Besides, look at what the smarties like Warren Buffett are doing now: They're not running from stocks. They're buying them. There are bargains out there, and once the market rebounds (and it WILL rebound; if nothing else, markets don't stand completely still), you could well be sitting pretty!
 

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Discussion Starter #6
Ed, I'm 40. I'm so glad I asked here! :)

Allie, now that you mention it, the last time I went on to the Vanguard site, it did give me options to move stuff around. I didn't realize it was that easy!!
 

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I moved all my current stuff into the savings part of it and then started over with funds I was in. Like Allie, I can do on-line and no charge for keeping in the 401k, but moving it around. DON'T withdraw it! Like Ed said, huge penalites and tax season won't be a happy one next year. DH pulled his out last year and we got socked, BIG TIME. I'm still pissed about it. And if your employer matches, you should put at least what they match in!
 

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Our 401(k) manager (Merrill Lynch, now Bank of America) has a feature called an auto-funds manager or something like that. If you choose, it can re-balance your allotments based on performance. So if one stock in your mix is doing badly and one is doing well, they will shift the poorer for the better and average everything out.

Maybe something to consider?
 

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Discussion Starter #9
Yes, my employer matches very nicely. :)
 

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Right now I'm debating whether to start re-contributing to my 403b (similar to 401k but I work at an educational institution). I stopped a couple of years ago and in my case (since I'm 29 years old and have plenty of time for the market to recover) I probably should start contributing again but I'm also trying very hard to pay off my credit cards. It's hard because every little bit counts in both areas and I'm going to have to start paying $50 more per month in rent next month so my finances are becoming tighter and tighter.
 

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Discussion Starter #11
December 21, 2012 keeps coming to mind. :( :eek:
 

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Now is the time to put extra in your account.

Not to get out.......you'll never make up for your losses.......ever probably.
 

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Does this turn into a 401K education thread? Yep! Its a topic that I think is important to everyone. This lesson is focused on those that are not contributing to a 401K or similar at least to the level that the employer provides some matching. WHY NOT?

I understand that money may be tight for some. CCs that need to be paid off, living expenses that don't leave anything left. Okay! It happens! Time to get a grip on living expenses and get that debt paid down. BUT, it is also time to focus on the future and potential retirement. The sooner you start the better off you will be. I could tell stories, but won't. I will offer a plan to get you started relatively painlessly.

Your next raise, doesn't matter how much. That percentage goes into your 401K. ALL OF IT. and you make that change the day you find out what your raise is going to be. You never see the money, you won't miss it. You were living on what you were making the month before, you will be able to survive the next year the same way. Oh! You haven't reached the limit yet? Guess what? You do the same thing next year, and the year after until you get to the limit. Its kind of painless, and you don't feel like you are cutting back on anything.

If you are fortunate to get any matching from your employer, say 25 cents on the dollar for the first 10% you put in. That is like a 25% gain on every dollar on the day you make the contribution. Maybe you get 50 cents on the dollar, maybe dollar for dollar. That is money you are throwing away if you aren't making the contributions.
 

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Discussion Starter #16
Raise? What raise? Company-wide freeze last year and I assume this year has to be the same.

Great advice though, Ed! Everyone, really. :)
 

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You also get a tax benefit from contributing to your 401(k)...it lowers your taxable income and reduces the amount of tax you pay. I found that when I bumped up my contribution 5%, I barely noticed a reduction in pay because of the savings in the amount of federal tax taken out.
 

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Your next raise,
This made me laugh out loud.

(I agree with your entire post... just the idea of a raise was funny to me)
Ditto. We've been under a no-raise, no-bonus rule since it was suddenly (and arbitrarily) imposed 3Q08.
 

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I worry about the young people in their late 30's that don't have a retirement plan. They think they have a lot of time to think about it. Now is a great time to start when everything is so cheap.
 

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I worry about the young people in their late 30's that don't have a retirement plan. They think they have a lot of time to think about it. Now is a great time to start when everything is so cheap.
YES! Now is a great time to start. Last month would have been better, last year even better. the first paycheck would have been best.
 
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