I am thinking of pulling all my cash out of my 401K

[StageLeft]

I've thought of it. I was 100% stocks. When the dow hit 10k I went 30% into bonds and that's the only value that has held, the rest of course hemorrhaging. Although the experts are close to useless now, the prevailing wisdom from most lucid pundits is to stick it out and do not change a gameplan in the middle of a crisis. The fact is these things happen. Not often as bad as this, but bear markets do come, so you have to ride them out. My main mistake was being 100% stocks before. Maybe I should have been a bit less than that, but then I am quite young, so it wasn't a horrendous one. I'm going to stay 30% and keep the rest in stocks. And if the market drops to a dow of 1400 (equivalent to Great Depression's 90% loss), well then fvck, at least I have that 30%.

My main problem now is still buying 100% stocks with my 401k matching. It's quite painful to be still throwing money into a market that keeps falling, but then none of us REALLY know if it's going to hold tomorrow and never go lower ever again or it will keep going. Missing out on a market crash sucks, but missing out on a market rally is stupid, and there's a difference, because the second just means you got out low and missed the boat when it left port, and that will definitely happen to a lot of people.

There are only two reason for you to take it out now. If any of these two is true to you:

1) You think there is a good chance you will need the money soon (unemployment, for example).
2) You believe the economy is irreparably and qualitatively fvcked beyond any near turn repair; that this is more than a bear and stocks are simply a poor investment for at least the next decade, maybe two.

 

[Skeeedunt]

Originally posted by: Citrix

Originally posted by: Noirish
try to put it in bond or guaranteed portfolio.

paying tax on the remaining is the worst thing you can do now.
it's instant loss.

if the pattern continues the tax will be less than what i will lose.

How is that taxed again, marginal rate + 10%? You really think the market will continue to fall by that much? Or am I off base here?

 

[Cattlegod]

Originally posted by: Ns1
buy high sell low!

sage investment advice.

 

[BoberFett]

Originally posted by: BrownTown
Thats got to be the dumbest idea ever man, you have lost any REAL money until you cash out. Just ride it out, its not like the stock market will never come back (and if it does our economies gonna be so fucked up NOTHING will be safe)

This is a fact.

 

[Cheesetogo]

This is the worst thing you could possibly do IMO.

 

[Gibsons]

Originally posted by: TallBill

Originally posted by: Gibsons
The time to pull the money out was about 3 months ago. Pull it out now and you're basically selling low.

Actually the time to start sliding money out into bonds or cash was well over a year ago, and then the time to start slowly sliding money back into the market was about a 1-3 months ago.

That was the ideal time... But for just beating the crash, August was about the time. I'm looking at a 3 year chart of the S&P500. The peak/best time to sell was about october 07 (about 154), but it was still sorta okay this August (130 or so). The real nosedive was this September/October - about 130 in early September to a current low of under 80.

 

[TallBill]

Originally posted by: Gibsons

Originally posted by: TallBill

Originally posted by: Gibsons
The time to pull the money out was about 3 months ago. Pull it out now and you're basically selling low.

Actually the time to start sliding money out into bonds or cash was well over a year ago, and then the time to start slowly sliding money back into the market was about a 1-3 months ago.

That was the ideal time... But for just beating the crash, August was about the time. I'm looking at a 3 year chart of the S&P500. The peak/best time to sell was about october 07 (about 154), but it was still sorta okay this August (130 or so). The real nosedive was this September/October - about 130 in early September to a current low of under 80.

Well my post assumed that you didn't know when the actual high or low existed.

 

[CPA]

Originally posted by: manlymatt83
You should be able to liquidate your positions and put the remainder into savings without taking a hit.

WTF are you talking about? Citrix, do not take this advise.


Apologies if my sarcasm meter is broken.

 

[CPA]

Originally posted by: Citrix

Originally posted by: Hoober
You're a pretty young guy, right Citrix? If so, I'd just let it sit there. Historically, the market always comes back.

If you're 70, then you're just SOL.

I just turned 40

Citrix, you have at least 25 years left. Don't touch your damn 401K. In fact, your 401K should be the least of your problems. Work on paying off your debt, then an emergency fund. If you pull that 401K, I'll never take you to an Astros game again!

 

[TallBill]

Originally posted by: CPA

Originally posted by: manlymatt83
You should be able to liquidate your positions and put the remainder into savings without taking a hit.

WTF are you talking about? Citrix, do not take this advise.


Apologies if my sarcasm meter is broken.

It isn't, look at matt's portfolio in the other thread.

 

[JEDI]

Originally posted by: Citrix
i can not believe how much money I have lost in my 401K. 6 years of earnings gone in 2 months... all my funds have dropped by over half and from what the talking heads are saying the market isnt going to get any better.

so what is one to do? sit back and watch my hard earned money just go away? or pull it out and put it in a fricken savings account that will earn 1.5% interest? that 1.5% is a lot better than what i am earning right now.

yes i know i will have to pay a tax but at the moment that tax will be cheaper than sitting on it and watching the market siphon my funds dry.

shift all to bonds.

i've been telling everyone this since the dow dropped below 10k.

remember the chicken little story "the sky's falling" they all said.

Yeah, it is falling... free falling to Dow 5000

 

[blurredvision]

I know nothing about stocks, and even this sounds like a completely stupid idea to me. Like somebody said before, even if the market doesn't bounce back in a year or a few, we're all fucked anyway.

 

[TallBill]

Originally posted by: JEDI

Originally posted by: Citrix
i can not believe how much money I have lost in my 401K. 6 years of earnings gone in 2 months... all my funds have dropped by over half and from what the talking heads are saying the market isnt going to get any better.

so what is one to do? sit back and watch my hard earned money just go away? or pull it out and put it in a fricken savings account that will earn 1.5% interest? that 1.5% is a lot better than what i am earning right now.

yes i know i will have to pay a tax but at the moment that tax will be cheaper than sitting on it and watching the market siphon my funds dry.

shift all to bonds.

i've been telling everyone this since the dow dropped below 10k.

remember the chicken little story "the sky's falling" they all said.

Yeah, it is falling... free falling to Dow 5000

You shift to bonds when stocks are on the upswing.. once it starts heading down to far you are to late. The exact point of to late depends on what your actual cost basis is.

 

[FlashG]

Originally posted by: rudeguy

Originally posted by: joesmoke
put it ALL in GM...

If I buy stock in GM, does that mean I will own part of the government soon?

Yes but it will be the Chinese government

 

[dirtboy]

Good ol' index funds 4tw. It's the atot favorite.

 

[lightstar]

i've decided to do the same thing and liquidate my 401K

 

[darkxshade]

Just an observation: Everyone is pretty much just rehearsing the standard answer that's everyone keeps telling each other. The "oh you're young, keep it in there, it'll recover" speech. The thing is that this question has been asked pretty much everyday since the sub prime problem first reared its ugly head and we've been telling them the same thing ever since. If they had not listened to us then and pulled out of their 401k and put it into something safe pretty much anytime before say the day Bear collapsed, they may have been very well off than they are now.

Seriously, how many of us are 100% certain of what will or will not happen in our economy? Yes, this advice has proven to work in the past, yes it makes a lot of sense, yada yada yada but we're not professionals(not all of us at least), we didn't even ask him what he has in his 401k but seem all too certain that we're the foremost expert in this area to hand him this little gem of info for which we have no actual expertise in. If an actual analyst came into this thread right now and told us that he is fairly certain based on his research that the market is going to tank another year and for as far as another 30%, would it not be prudent to take the money out and put it back in later at the lower price? But how could the OP make an informed decision if all the other uninformed knowitalls keep bombarding him with the same sales pitch to leave it alone, I mean who would you listen to, the one guy or the crowd? It's like the blind leading the blind.

So my advice to you Citrix is to weigh your risks. Sure the market will recover in time if you leave it alone but at the risk of more losses in the short term. If you do decide to take it out, then it becomes a gambling issue. You stand to lose a lot due to the penalties and the gains you've lost if the economy begins to recover tomorrow but if the recession gets worse then you will have spared yourself from further loss in the short term for which you could put back in later and retire a little richer. It's ultimately up to you to do the research and make the decision on your own.

IMO the market hasn't hit bottom yet because Q4 is the shopping season. The retail sector is going to get hit hard because people are afraid to spend due to the uncertainty of the economy and their jobs being on the line. Plus the auto industry is in disarray. Now this does not mean I'm advocating taking your money out of the 401k, I don't know how much further the indices may drop, it may not drop at all but even if it does, it has to drop a lot for it to be worthwhile for you to consider due to the penalties. So like I said, it's your gamble.

 

[Pepsei]

this is what i did for my 401k,

i moved everything within from stocks to stable fund a few months ago. after i saw -7%, with no end insight from last quarter.

i should see ~+1-2% next quarter.

when i'm sure stock would go back up again, i'll move the money back to where they were.

no tax penalty....

 

[SludgeFactory]

Ride it out. Things will turn around eventually and you'll be kicking yourself for panicking back in '08. If you were 63 right now, then you'd have a reason to stay awake at night, but at 40 this is a no-brainer.

And taking the money out and getting absolutely screwed by penalties is the worst thing you can do. I'd move it all into your 401k's money market fund before I'd do that.

 

[dsfunk]

I'm buying

 

[fishmonger12]

SELL NOW OR YOU'LL END UP WITH A 401K THAT'S WORTH SOMETHING!

 

[uli2000]

Why pull it out? YOu will lose 40% right there (20% tax witholding, 20% penalty). Just put it in gov't bond funds if you are scared. Honestly, this is a great time to up 401k contributions and pick up great funds dirt cheap.

 

[s0ssos]

Originally posted by: child of wonder

Originally posted by: Citrix

Originally posted by: CrazyLazy
Stick it out man

I have stuck it out and its cost me a LOT of money. do i continue to stick it out and lose the rest of my money and have no retirement funds at all?

It hasn't cost you ANYTHING unless you DO pull it out.

If you're still 10+ years away from retiring don't even worry about it.

i find it ridiculous how stupid people say that. it hasn't cost you anything until you pull it out. what if the company goes down? you haven't lost anything til you pull, it out, eh?
and people saying the market will rebound. how long are we talking about here? people have been saying that all this past year, the bottom has been hit. apparently not yet

 

[s0ssos]

Originally posted by: Fingolfin269
Do you really think if the stock market continues to drop on you, or crash altogether, that your measly amount of leftover cash is going to mean anything? Exactly. Leave it the eff alone.

yes. i remember in the great depression a nickel was worth an awful lot

 

[Colt45]

Take it all out and buy oil. Not futures, but actual barrels of crude. Store them in your backyard.