9 Oct 2008 8:42 am   //   Filed under: Hard times


Friends have asked me what I’m doing about my 401K fund, given the recent performance of the stock market. I obviously have no qualifications to give people financial advice, but here’s my answer: I’m doing nothing differently. I’m going to keep contributing a few percent every paycheck and direct most of it to stock investments. For somebody like me (who won’t retire for another 35 or 40 years), there’s no sense in getting stressed about the markets. After all, there are only two possible scenarios:

1. Stocks will go back up. Even if it takes 20 years, it’s going to work in our favor in the long run.

2. Stocks will never go back up. The American economy reached its peak in 2007 and it’s all downhill from here. Soon we’ll be withdrawing dollars from the bank and burning them as a source of warmth.

In either scenario, you’re not going to benefit by fiddling with your 401K investments right now. The best and worst thing about 401Ks (vs. pensions) is that the individual employee controls his or her own retirement fund. We all knew there were risks to this system when we bought into it. Now we have to have the discipline and patience to let the system work for us. Stay the course. Ignore Jim Cramer.