401K question - should I buy shares now?
401K question - should I buy shares now?
My friend says I should keep contributing in my 401K now eventhough the share market has plummeted - that is because the price per share is lower now, and it is a good time to buy. Is that true? How so?
Answers:
john o: it really depends on what share he is talking about, some are good right now, and will be good for the next 6 months, example- mining companies and pharmacutical companies, some are really bad and you don't want to be buying more, like anything that has to do with financials or banks. You should try a service like www.thewallstreethunter.com they have a really good track record for picking stocks and they offer insightful info about the market every day.
Good luck...
2008-01-08 17:29:12
2008-01-08 17:29:12
Randy G: You should always buy more stock when the market tumbles -- buy low and sell high is how you make money.
If you are contributing money into your 401k on a regular basis (by auto deductions from your paycheck), then you are doing something called "dollar cost averaging". Since you are contributing the same amount every month, then you are automatically buying more shares when the price per share is low, and you are automatically buying less when the price per share is high -- which is what you should be doing.
Statically speaking, you cannot time the market, so you should put most or all of you retirement money into stocks and leave it alone until after you retire.
I would recommend that you read the book "The Lies About Money" by Ric Edelman. it explains all of this and more.
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Try this:
2008-01-08 17:35:59
2008-01-08 17:35:59
Chosen Answer
J: If you are investing for the long term such as for retirement and you have more than 5 years until you will be using it then you should stop focusing on what the market is doing today or waiting for tomorrow. The market may continue to go down or they may cut interest rates and they will jump, we could invade Iran or Iran could get rid of their current leader - no one knows. In general the markets have gone up over the longer term. no guarantee. You should have well diversified investments some stocks some bonds and continue to contribute and hopefully get you employer's match.
2008-01-08 18:12:43
J: If you are investing for the long term such as for retirement and you have more than 5 years until you will be using it then you should stop focusing on what the market is doing today or waiting for tomorrow. The market may continue to go down or they may cut interest rates and they will jump, we could invade Iran or Iran could get rid of their current leader - no one knows. In general the markets have gone up over the longer term. no guarantee. You should have well diversified investments some stocks some bonds and continue to contribute and hopefully get you employer's match.
2008-01-08 18:12:43
engineer50: Yes, the best way to contribute to a retirement account is with monthly regular investment. When the markets are down, you are in a sense buying it "on sale." Remember that 401(k)s are a long-term investment - don't chase market ups and downs.
2008-01-08 18:22:57
2008-01-08 18:22:57