Should we pull out of our 401k due to loss for last ... - Roth IRA News

NO.
Do not stop contributing to your 401k

This is a natural thought?. That you must fight.
See if this story below helps.

Looking back to June of 2007 you were very happy with the returns you were seeing on XYZ fund within your 401k.
Back then for every $100.00 dollars you were buying 5 shares @ $20.00 per share, and you noticed that over the previous 3 years its price had went from $15. per share to $20.00. You said to yourself wow that is a 25% return over 3 years.

Now that same $100 is buying the same quality investment but since you are ?stayng the course? your $100 is buying 10 shares. How smart are you! , when the price is low you are doubling the amount of shares you buy.

Now in the future when (not if) the share price returns to $25.00
the shares you bought in JUne 2007 (5 shrs @ $20) are worth
$125.00 or 25% increase (if you assume that takes 5 years ) that is
still 5% a year growth on your money. (Pre-Tax,Grows Tax Deferred, and because of pre-tax savings it possibly lowers your overall family tax rate. You keep more of your money)

Now lets look at the shares you bought in March m2009.
(10 shares @ $10.00 per share)
When (not if) the share price recovers to $25. per share
your $100 dollars is worth (10 shrs x $25.) $250.00 or a 250% return.

So June 2007 buys + March 2008 buys = 5 shares + 10 shares = 15 shares. 15 shares x $25.00 = $375.00 ( from your personal investemnt of $200.00) or a $175.00 gain.

If it takes 5 years from June 2007, June 2012 that is approximately a
87% return divided by 5 years = 7.2% return average per year.
Not Bad !

At that rate, if you could continue your Money would double every 10 years.

If i am 50 years old, plan ot retire @ 66 yrs old, might need to use my 401k moey when i am 70 years old, and i have $50,000 in my 401k right now, that means wehn i am 70 the 401k would be worth $200,000.(My account doubles every 10 years is you average 7.2%)

Once again. Not Bad.

Believe in the US/Global Economy, you are much closer to the end of this recession then the beginning. Keep doing what you are doing for yourself and your family.

People who have money, are also asking quesitons like yours, except one slight difference.
They are asking should i be increasing what we put in our 401k to take advantage of this ?Short Term? drop in prices.

I hope this helps.

Source: http://rothira.solve-up.com/roth-ira/should-we-pull-out-of-our-401k-due-to-loss-for-last-few-quarters/

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