Protecting your retirement plan

Protecting your retirement plan

by Amber Idleman on Oct 19, 2018

401k, Planning, retirement planning, Retirement

 To say that the stock market has been volatile over the last few weeks would be quite an understatement!  The S&P 500 peaked at 2,940.91 on September 21st and dropped to 2,710.51 on October 11th; a decline of 7.5% in three weeks.  The Dow Jones Industrial Average decline happened in an even shorter period.  It peaked at 26,951 on October 3rd and dropped to 24,900 on October 11th.  A decline of 2,051 points or 7.6% in a week!  Granted, we have seen some recovery but we are still well off of the

the 2007; the last cycle peak.  Yet the value of the S&P 500 has nearly doubled during that period (187%!).  And the NASDAQ Composite has nearly tripled (280%!). 

And this was a period of declining interest rates.  But the U.S. Treasury will have highs of these indexes. 

I’m sure most retirement accounts have been impacted by this.  And that often leads to the question of where do we go from here.  Well I don’t put a lot of faith in forecasting – I heard a great saying years ago that economists have predicted 9 of the last 6 recessions.  But I do observe trends and market signals.  And they have been flashing caution for a couple of weeks and continue to do so. 

Do you have a discipline or process for navigating this kind of market?  Or do you believe in buy and hold?  Or as we like to say; sit and take it!  And be wary of the talking heads that tell you that this market is inexpensive now.  I just read an article that pointed out the U.S. GDP has grown by a total of 20% since the end to finance a $1.2 trillion deficit and fund $600 billion of treasury bonds that the Federal Reserve is going to let run off of their books.  I don’t know where you come from, but where I come from $1.8 trillion (yes, that’s a T) is a lot of money!

Again, what are you doing to protect your 401k, what is probably your biggest asset?  If you are within 10 years of retirement, can you afford to go through a rerun of the last 2 bear markets.  Remember, in the last cycle the S&P 500 peaked on October 9th 2007.  The next time it saw that number was March 28th, 2013.      5 ½ years is a long time to get even!   

We use several independent 3rd party research services to guide us through various market conditions and retirement account allocations.  You don’t have to manage your most important asset alone.  Professional help is available. 

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