Stocks

Everyone would like for the stock market to only go up but that is not reality. I’m 20 years from retirement. A little money is deducted from each of my paychecks for my 401(k). Let’s say when I retire around 2030 that the Dow is at 25,000 (just a wild guess). I would make more money if the market has some wild swings during this time than if it steadily grew toward it. Since I invest a little every month I would automatically buy more shares when the market is down than when it is up. This strategy is called dollar cost averaging and is a way to slightly beat them market over the long run.

Like I said, the problem is that people who are near retirement are still heavily invested in stocks. Your investment portfolio should always reflect your risk tolerance. Since I’m 20 years from retirement my risk tolerance is higher than someone near retirement but lower than someone 30 years from retirement.

Well, whatever it will end at I really am not happy about what is happening.

Nobody really knows where the bottom will be. I’ve seen predictions of 8,000 and 7,500 but the Dow is already below that. Will it be 7,000? 5,000? even lower?

The market goes up and down. For long term investors market swings are not bad, in fact they can be a good thing. The market being low is a buying opportunity.

The people it hurts are those who need their cash now but are too heavily invested in the stock market. It is alway prudent to reduce the amount of your portfolio invested in stocks as you approach needing the cash. e.g. someone in their 20s should probably invest nearly all of their retirement in stocks while someone nearing retirement should be almost entirely in bonds and money markets.

The thing I worry about is jobs rather than where the stock market goes. As long as I can hold a decent job I’ll be ok.

So are you saying that it is ok that the Stocks droped form 15,000 to 7,000? that seems like a huge drop I would understand if the stocks only dropped 1,000 points.

Oh and the Job Market is very bad right now so it is a huge possibility that you could lose your job any day…I’m not saying you will I’m just saying it is possible.