A friend told me about a terrible thing that happened to her roughly six years ago. She was driving her car in heavy traffic on a hot summer day when she smelled something burning. The odor seemed to be coming from under the hood of her car. She tried to drive another fifty miles to her destination, but the car sputtered to a stop before she reached her destination.
I asked my friend (let’s call her Pricilla) when she last had maintenance performed on the car. “Oh, I don’t remember”, she said. “Probably last year. I just don’t get the time to take it in to be checked.”
I was in a restaurant last week when I overheard a patron lamenting about money he lost in his 401(k) plan during the past five years. His voice was a “stage whisper”, and the man didn’t seem to mind that I knew his investments were unsuccessful. I think his name was Newton.
“This economy has really taken its toll on the little guy,” he said to me. “How old is your 401(k)?” I asked. “About 15 or 16 years”, he replied. “It was doing nicely when I first started out. I lost more than thirty percent of my money. That’s the economy for you.”
No, it isn’t.
I asked my friend (let’s call her Pricilla) when she last had maintenance performed on the car. “Oh, I don’t remember”, she said. “Probably last year. I just don’t get the time to take it in to be checked.”
I was in a restaurant last week when I overheard a patron lamenting about money he lost in his 401(k) plan during the past five years. His voice was a “stage whisper”, and the man didn’t seem to mind that I knew his investments were unsuccessful. I think his name was Newton.
“This economy has really taken its toll on the little guy,” he said to me. “How old is your 401(k)?” I asked. “About 15 or 16 years”, he replied. “It was doing nicely when I first started out. I lost more than thirty percent of my money. That’s the economy for you.”
No, it isn’t.
Granted, the markets responded to the greed and corruption that nearly blew up Wall Street; but that’s not the only reason Newton lost his shirt in the market.
No one forced Newton to stay invested from January 2007 ‘till now while clinging to the dream shared by millions that 401(k) plans are synonymous with retirement security. Pricilla can’t blame the breakdown of her car on the heavy traffic she was in. Quite simply, she wasn’t prepared for the inevitable mishap.
What do these two misguided wayfarers have in common? The answer is they both were irresponsible, being too casual with their planning and conservation of important assets. In other words…
No one forced Newton to stay invested from January 2007 ‘till now while clinging to the dream shared by millions that 401(k) plans are synonymous with retirement security. Pricilla can’t blame the breakdown of her car on the heavy traffic she was in. Quite simply, she wasn’t prepared for the inevitable mishap.
What do these two misguided wayfarers have in common? The answer is they both were irresponsible, being too casual with their planning and conservation of important assets. In other words…
THINK ABOUT THIS...
WHAT IF YOU EXCHANGED YOUR MUTUAL FUND SHARES FOR MONEY MARKET SHARES EARLY IN 2008?
S&P chart courtesy of Yahoo! Finance.
Just think, if you had $100,000 sitting in various funds in your 401(k) plan in January 2008 and exchanged your shares from equity and bond funds into a traditional money market fund, your account would be valued at approximately $104, 000 today (assumes a 4% compounded growth rate), regardless of what happened to the rest of the market!
The Merrill Lynches of the world would not have sold you out - FOR A FEE - and, if a few million alert investors did the same thing, the economy would not be in its current condition. That's because enough Americans would have more money to spend - or save for retirement.
The Merrill Lynches of the world would not have sold you out - FOR A FEE - and, if a few million alert investors did the same thing, the economy would not be in its current condition. That's because enough Americans would have more money to spend - or save for retirement.
Unfortunately, untold millions of employees did not hear from their financial advisors in time or their 401(k) fairies were at a convention for the past year.
Please take this short quiz on the American Economy.
1. You believe The Recession is over
2. You expect the Dow Jones to hit 10,000 by December 31, 2009
3. Making money in the stock market is all a game of chance4. More jobs will be lost in 2010
4. Holding on to your stocks for the long term is the best strategy
5 The Federal Reserve is an agency of the U.S. government
6. Mortgage-backed investments are not safe
7. If you continue saving in your 401(k) plans, you will have enough money to retire in 10 to 15 years.
If you answered "Yes" to three or more questions, read my recent novel:
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