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I'm 25, and my retirement account is currently heavily invested in mostly riskier areas such as stocks etc. Should I alter the allocation into "safer" areas or ride it out?
If you elect to ride it out you might be at a very low point when the market recovers and those riskier investments begin to pay off. If you move to safer investments now you will preserving most of your principle and when the market recovers you will have more to start with. You should consult an expert to check if there are any penalties when you transfer to other low-risk investment plans.
At 25 you're entitled to make some mistakes and take some risks. We're in for some volatility now (sept 18, 2008), but if you move your funds you might be locking in your losses and maybe miss a rebound--like the bounce we saw today--unless you've lost all faith in a fund. If you are merely changing future allocations you might be missing the buy-low phases of the dollar-cost-averaging strategy. If you feel you're too heavy in high-risk funds, do some reallocation. One strategy is for 401k's with an employer match (e.g., 50% on first 6%) is to figuratively put your contributions, 67% of the total contributions, in the conservative and the employer portion, 33%, in the higher-risk. That way you psychologically preserve your own capital and are riskier with the other. Technically it's all yours if your 100% vested, but that can still be a useful way to look at it.
Josh at your age I would not worry to much,you've got time on your side.I'm forty years young and currently purchasing the best stocks on a bi weekly basis.There are many great opportunities to take advantage of now.
Having the perfect answer to that question is questionable. Stocks are always risky; but, knowing what I know right now, it doesn't matter where the economy is, our company has a history of escalating in profits. When bad things happen in this Nation, our company does better. Our stock (8/22/08 USA Today article) is #3 top performing stock over 15 yrs of consecutive growth. You might want to check out the article and a site that tells the story of who, what, and how we do it. www.Gettingto.buildlastingsuccess.com Maybe a Plan B for your life would be a good thing to enhance that Financial Portfolio of yours.
Generally speaking no. If you move out now you will make permanent your losses only to buy back when the market is higher. However, it mainly depends upon which stocks you hold. If they are really not very stable companies with large debt, and the market continues downward, you could lose more or even all of your investment. However, if you hold good companies with good long term prospects you may even want to buy more at these levels. At age 25 you can afford to take risks that old people cannot. And remember some great companies are paying a huge dividend as a percentage (yield) of their price these days and have great longterm prospects. Companies like GE and some large drug companies fall into this category. In the current environment it is fortunate that past performance does not guarrantee future gains or losses. Good luck and happy stock picking. JW
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