Lost 22% of our IRA/401Ks/Investments

[Torvy]

I only invest in mutual funds, no single issue stocks. And I am in the riskier types. One fund Select Semiconductor has averaged a 25% yearly gain over the past ten years. But when the market drops, that fund DROPS. Then it comes back strong. Not the first time I have watched this happen.

That's a key piece of info!

Rarely does a broad fund lose money over the mid-long term. The economic conditions needed for that to happen would bring about the type of disarray that preppers prep for....in other words, the system would collapse anyway.

Buying individual stocks can be boom or bust. You have to be lucky or very good at analysis (sometimes both). Politics, weather and other unpredictable events can tank an individual stock. Usually when one stock (or industry) is down, there are counter-indicated investments that do well. That's why it is almost impossible to make less than 7% over time. You really have to have made poor decisions or trusted someone who made them for you.

 

[LittleBittyBigJohn]

I'm happy with mine so far.

 

[jyoutz]

But it was the end of the world…. The markets dropped like 50%…

Kids these days are afraid of 10%

It all depends on the time frame when you need the money. Long term no problem; retiring tomorrow: big problem when the market drops.

 

[Torvy]

It all depends on the time frame when you need the money. Long term no problem; retiring tomorrow: big problem when the market drops.

It's not like you take the money out when you retire. It keeps making money. You change the risk level of your investments as you age. Move more into income production rather than price changes.

If you are really concerned about this, get a good investment guy. They make a world of difference. Need to find one that's about 20 years younger than you, so they don't retire before you don't care anymore.

 

[jyoutz]

It's not like you take the money out when you retire. It keeps making money. You change the risk level of your investments as you age. Move more into income production rather than price changes.

If you are really concerned about this, get a good investment guy. They make a world of difference. Need to find one that's about 20 years younger than you, so they don't retire before you don't care anymore.

Actually I’m not at all concerned and I don’t need any of my investments for retirement living expenses. But many people do.

 

[CloverKnollFarms]

Made money today since Canada caved in and gave up on their digital tax.

 

[MossRoad]

We lost 22% of our investments in February, March and April. Three months later we are back in the black and making money again.

Basically my wife and I lost, on paper, two years salary each in about 45 days. This was from her 401K, my IRA, and our investments. The only thing that didn't lose value was an annuity paying 3% that my wife had inherited. Everything slowly started coming back in May, and now before June is over we were even last Thursday and made money again Friday. I didn't change a single investment, just let it all ride.

YOU DON'T ACTUALLY LOSE MONEY UNTIL YOU CASH IT IN.

When the news stations are all gloom and doom and the stock market is crashing, that means stocks and mutual funds are on sale. And you BUY!! When you sell is when everything is going up.

RSKY

Here's a fun site to put it in term of administrations. Under the graph, you can click whichever administration(s) you want and compare them side-by-side, over time, etc... the only ones to leave it in negative territory were Hoover, Nixon and W. Bush administrations.

S&P 500 Performance by President

This interactive chart shows the running percentage gain in the S&P 500 by Presidential term. Each series begins with the closing value of the month of inauguration and runs to the closing value of the last month of the term. The y-axis shows the total percentage increase or decrease in the...

www.macrotrends.net

 

[dstig1]

It all depends on the time frame when you need the money. Long term no problem; retiring tomorrow: big problem when the market drops.

It's not like you take the money out when you retire. It keeps making money. You change the risk level of your investments as you age. Move more into income production rather than price changes.

If you are really concerned about this, get a good investment guy. They make a world of difference. Need to find one that's about 20 years younger than you, so they don't retire before you don't care anymore.

Actually he is spot on. The biggest risk to a secure retirement is retiring into a down market. (Assuming you had sufficient savings going into that point. If you didn't save much, well there isn't much help for you at this point no matter what.)

The problem with this one scenario is that you are drawing from those funds that are now depressed in value. If you need 50k and you pull it when you fund is worth $1M, then that is 5% of your assets. But if your fund values dropped 20% (not unrealistic in a bear market) to be $800k, then that is 6.25%of your assets. So not only have you taken a larger percentage of your available funds, but now that amount in unavailable to grow back on the rebound. You basically take a double hit if you get caught in this situation.

Can you mitigate it? Sure, to some degree. You can try to take less out, but of course you still have to cover expenses. Can reduce expenses some, but not always easy. You can take a job to get some income to help. Stuff like that, but it is a definite gut punch to those that just retired and were looking forward to a nice relaxing retirement. A down market later in retirement is generally not as big a problem.

 

[Torvy]

This is largely mythical. It assumes situations that tend to be the problem rather than the market.

Dividends pay out on the number of shares you own, not the market value of those shares.

Unless your are in a rare situation where you were expecting to retire in 20 years, but you had an accident and are forced to retire immediately and it happens to be at the trough of a down market, this is fear mongering. When you approach retirement (years before, not days before), you either a) have much more than you really need or (more commonly) b) shift your investments into lower yield, lower risk investments (including, but not limited to more dividends). Those types of investments don't drop 20% in a down market (and/or they dont payout based on market price). Any trained professional will help with this. Heck, many modern funds automatically do this as you approach retirement age. So, when the overall market drops 20%, these either gain or remain unchanged against the stream. They also don't make huge gains, either. There are also other funds that specifically counter big drops using a combination of bond funds and derivatives.

A typical retiree (62-65) should not only have their investments largely crash-resistent, they shouldn't be pulling 5% out all at once. Even if they did and that 5% became 6.25%...that's from 20 years to 16 year of remaining assets...but that's assuming you gain ZERO over those 16-20 years. Since the typical S&P fund returns 10%, you would never run out of that money in your lifetime.

 

[KennyG]

If you need savings in retirement, keep a year or two needs in something like a money market. In good years take income out of equities, in bad years out of fixed income sources.