What Should You Do With Your 401k?

by James & Miel on March 16, 2009 · 0 comments

Hi All,

With the utter decimation of the stock market in the last few months, many of you may be wondering what to do with your 401k or 403b accounts. Here are some thoughts:

1) Keep Contributing. Even if your employer has stopped making contributions, stock prices are at record lows right now. If you keep contributing, you’ll be buying when prices are relatively low. Also, if you don’t keep contributing, you’ll miss out on the tax benefits. All things being equal, every dollar you contribute will result in .10 to .35 cents off your taxes – depending on your tax bracket.

2) It will take a long time to recover. Most people we’ve talked with are down by 30 to 50% from last year. Even if the stock market’s overall return is between 9 and 11% it will take several years to reach the level of where things were last September. However, if you continue to make contributions, your 401k accounts should produce faster results. Even though you may be discouraged, continue know that eventually you will build your wealth back up and begin creating new wealth.

Just to let you know, we’re planning on maxing out Miel’s 4013b contributions this year.

Best,

James

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