Mutual funds

[roosmom]

I came home from work Friday and talked with my husband about our seperate retirement accts. We decided to stop making such lg contributions to our retirements. I look at it this way....why pour money down the sink. We will continue to deposit ten dollars a month but that is all.
Has anyone else made a decision like this? Do you think it is a wrong decision?

 

[patandchickens]

I think it depends on what your plan B is. Like, are you going to put the money somewhere else that you think is a better investment, or just not save for retirement? I don't think that not saving is a good plan, cuz then what are you going to do?

If retirement is a good ways away, then the usual general advice (which seems quite reasonable to me) is that you just have to hang in thru down markets, as overall the long-term stock market trend is decidedly upwards. A decent argument can actually be made for buying as much or more stocks/funds now, when you get more bang for your buck so to speak b/c prices are somewhat down. (Although, that depends on your picking the right stocks/funds to buy - probably don't want to buy umpty shares of something that goes completely toes-up )

If you do not believe that the market is going to recover, or if you do not believe that it will continue to head upwards til your retirement, then sure it makes sense to do something else with your money -- but what? It would require a lot of thought, bearing in mind the sort of economy etc that you'd be planning for.

Barring such a long-term enduring worldwide economic collapse, though, I am not sure what's a better investment for retirement... there may be SOME non-stock-market-related investments that typically do better than inflation, but I can't thnk of any offhand. And if your money is not doing better than inflation, your savings actually *decrease* in value over time instead of growing. OTOH even that is better than not saving at ALL.

It's a tough situation, and depends a lot on how close you are to retirement.

JMO, good luck,

Pat

 

[Zenbirder]

If either of you companies match funds that you put in a retirement account it is almost always advisable to max that out. If not then there are more variables to look at. I guess I have watched a few too many Suze Orman shows over the years...

 

[enjoy the ride]

I think it depends on whether you choose your own buys or you are forced into your company's choice.
You can always buy treasury notes or savings bonds- get a CD in a solid bank. Or any combination of these to spread the risk around all under 401k rules. If these things fail then there is not much you could have done to prevent losses anyway.
I don't know where the financial future is heading. But if a 401K is your only source of retirement income beside Social Security and you are within 10 years or so of retirement, I would still keep putting money into it. Remember that what you don't put in is taxable now.
If you are forced into one mutual fund, I would look at doing something else too unless it is rock solid.

 

[roosmom]

These are all good things to think about, thats to say I havent gotten that far yet. I am just thinking that we should coast for awhile. The funds that we have invested in will be there......whether they are doing badly or doing well. I do not plan on pulling out. I just thought we should not contribute so much.
Yes the co has a defined contribution plan, never thought about that. (that is the one where they match it correct?) Maybe I will just continue to put into that fund and lessen the other ones (i have three). Good point.
Sad to say I probably will have to work for another 15-20 years. Unless I go on disability.
I was thinking that money going down the drain would be going further to pay off the ultralight. And if things are better, then we can start contributing like we were. If it still is not going well, then it can help with other bills. But maybe a CD for 6months would also be a more feasible option. OMG I just dont know. I realize that you are into retirement for the long haul (at my age) but I am REALLY GETTING WORRIED.......

 

[dacjohns]

First of my feeling is to all that is realistic to get out of debt and stay of debt.

My personal situation.
Everything is paid for. I have a house that meets our basic needs and it sits on 100 acres.
I am retired from the Army and we have been able to live off my income. It does go away when I die. Then the insurance policies kick in. I need to do a review to see if it will be adequate for my wife.
We both have IRAs that are mutual fund based.

We are thinking about stopping the IRA contributions. We might be able to put that money to better use. We are a one car family and since I am currently working we could use another vehicle. Notice I said use, need. The money could also be used to build a real house. We live in a pole barn house that really is supposed to be a garage/workshop.

Our mutual fund nosedived on 9/11 and still hasn't recovered. I think we have paid more into it than it is currently worth. It is hard to sit it out and wait for all the theories to work and for us to come out ahead.

So to answer the question, is it the wrong decision? I don't think so but it may not be the right decision either.

 

[FarmerChick]

a financial planner told me

1. if you are in big debt, stop the retirement funds and pay down the big debt....(like for 2-3 years and get rid of the debt, then start back up with retirement funding)

2. if you are not in big debt, yes, you must continue to use the employer match retirement funds cause that is free money...do it definitely and contribute the max amt. cause matched money is a great deal!

3. be sure you truly know what your money is doing for you. Don't be an audience just watching your money, be a major participant and research options to make money on your money. Avoiding financial decisions doesn't help your money or your investment for the future.

A hard call is this---to stop funding retirement for a purchase of a thing? hmm...this is not something I would do. I would not take away from retirement funds to pay for a purchase like an ultralight, an overly expensive horse, pricey tractor, or anything else like that. But that is just me...LOL...again, I wouldn't do it but not everyone thinks the same on this....one hand says live for today in me, and the other hand says, wait, live within your means and be responsible for your finances truly....hmm.....

 

[roosmom]

I agree with everything. Man I wish I had 100 acres. But would I be able to pay taxes pn it? lol that is the question. The ultralite was bought a yr ago before things got this bad. It has a yr to go on the loan, it is only $100 a month but I want it paid off. NO big purchases for us for a long while. I am going to keep contributing to the emp matched retirement, but I am going to back off on the other two. I have tried to learn about stocks, bonds, mutual funds etc, I have a hard time with it. I would like to find someone local who would be willing to teach me more so I can be involved because you are right, I am a watcher not a participant. Thank you for the advice.

 

[FarmerChick]

The ultralite was bought a yr ago before things got this bad. It has a yr to go on the loan, it is only $100 a month but I want it paid off.

*******I hear ya here...you ain't in bad shape then cause if you only have 1 year left...I am sure you will be fine. I know what you mean, you want it paid off...Ugh, the farm equipment I financed and had to pay off, those loans just drag and drag til one day, boom, they are done...finally..LOL

property taxes are a killer....LOL....I am a prime example of "land poor".....I have land and pay dearly in taxes. I am "rich" on paper but poor to pay the taxes..HA HA

I got a situaiton too like yours. I have 4 years left to pay on my SUV and Tony is going to need a new truck soon...the big one like $35K....UGH...just kill me. I told him that we can't afford a new truck til we pay off the SUV. I could probably "just" do the payment but if something came up I would be stuck fast and hard...LOL....now I am wishing for the SUV to be paid off fast, which ain't happening...just to take on another payment...UGH! someone take me away! HA HA

 

[roosmom]

CALGON to the rescue.....LOL