Quote:
Originally Posted by wodin
A volatile stock market is fertile ground for day traders.
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Indeed. But for those of us who believe in investing rather than gambling, the decisions are much easier. If you are at least 20 years from retirement, simply ignore the current state of the market. Just stick another $X (where X is an amount you can afford) each month into your retirement accounts (where it should be mostly invested in the broad stock market, probably via an index fund) and sleep well at night.
If the market is down, your investment buys a larger fraction of the total market than it did when the market was high. Hooray!
If the market is up, your previous investments have done well. Hooray!
As you get closer to retirement, you'll want to start moving a fraction of your money into more-stable investments as a hedge against volatility. Cash and cash-equivalents spring to mind for this purpose. Just make sure that you remember that you'll probably live 20+ years after retirement, so you still need market-level growth in a significant factor of your portfolio. And
that means keeping a fair fraction of your retirement kitty in the stock market.
All of this is
very basic conservative practice for long-term investments. Exactly the kind of thing you should do with $$ intended for retirement.
Xenophon
P.S. For those who take the current market downturn as an argument against privately owned and invested retirement accounts -- in order for my 401K fund to be as bad a deal as Social Security, the market would have to go down by
another factor of two... and then never recover until I retire in another 22-or-so years. And even that assumes that SS will pay out for me at the rates they currently promise. Which seems unlikely, given that I am just after the tail of the baby boom.