Saturday, February 21, 2009

401 OK

I just went agro on my 401k.

According to The Washington Post, "The Dow...closed Friday at 7365.67, down 6.2 percent for the week. On Thursday, it fell below the previous bear-market low reached Nov. 20 to hit its lowest level in six years. On Friday, it plunged further as investors worried that banks would be nationalized."

I pounced on that like a cougar on a deer. Or like a cougar on a 22-year-old boy. Depends on which cougar you're more familiar with.

I started this job and this 401K almost a year ago. At the time, moving to a new city, starting a new job had me focused on movers and Bed Bath and Beyond more than honing in on the perfect investment strategy for something that wouldn't be accessible for 30 years. I also wasn't allocating a significant percentage to be taken directly from my paycheck in pre-tax dollars.

Silly girl, I know.

But in my defense, I needed cash in hand to pay for the months and months of moving-in and getting-settled costs... I was NOT using my credit card.

By January, with the holiday shopping over (no credit cards there either...Suze Orman would be so proud), it was time to tighten the purse strings and ramp up the 401K. Just an easy call to Fidelity and I more than doubled the amount going straight into my retirement account.
But I was still hemming and hawing about my allocation. I have a pretty boring mix of half stocks with an almost equal amount of bonds and cash.

I couldn't help but feel that I was missing an opportunity.
With retirement far off, I want to be aggressive and reallocate my mix so that I have more in stocks- now bought on the cheap- which will , with some time, eventually come back up in value.

The thing that scares novice investors about stocks is that the highs are higher but the lows are lower, in their returns. But for someone with 30 years until retirement, I can withstand the fluctuations and as I get older, I'll take profits from the stocks and buy more conservative bonds and cash options (which is what insulates one from losing so much in the event of another raping of the stock market).

You may have heard that 401Ks have been raked over the coals, but younger people can use this time to stock up on stocks. They're cheap.

I'm not taking this money out until I'm 60, so if the stocks continue to fall over the next 6 to 12 to 18 months, I'll just hold on to them until they come back up. Time is our asset.

I must say that while rationally, I feel savvy, in my gut I feel vaguely like a land speculator after Katrina. Stocks and bonds shouldn't be emotional but when so many have lost so much- jobs, investments- making lemonade from the souring fruit of Wall Street feels opportunistic.

Though this is no time to freeze up and lick our wounds.
Beyond my measly 401K, there will be good to come out of this time.

New ideas are being born. Even if actions are delayed due to frozen credit or the need for workers to hold tight to a current job for security, the creative juices of bright minds are flowing even more forcefully now- dreaming and scheming of the new world order that can and should be once we emerge from this black cloud.

And it is those individuals, those with drive, smarts and ambition, who will lead the way out.

1 comment:

Anonymous said...

Yes, it's cool, and useful for me
Fidelity 401k