Submitted by melock16 t3_11enhgw in personalfinance
Got some advice that since things are still in the red, it wouldnt be wise to max my 401k. Thoughts?
Submitted by melock16 t3_11enhgw in personalfinance
Got some advice that since things are still in the red, it wouldnt be wise to max my 401k. Thoughts?
So? I'm pumping up contributions. Wealth is made coming out of recessions. By thing unequivocally turn, you are late.
We haven't been in a recession in nearly 3 years - we may be in one later this year though.
Do you like buying things when they’re on sale or do you prefer paying full price?
Because if you like buying things when they’re on sale, as all reasonable people do, now is an excellent time to contribute to a 401k.
And stop taking financial advice from whoever told you not to.
Stocks don't go on sale - you can only know in retrospect whether now is an 'excellent time' to buy stocks or whether it will turn out to have been a bad one.
Ignore who ever gave you that advice from here on out.
If it’s a match from your employer. Hell yes keep funding it.
If you’re worried about a stock market crash…. I don’t know which way the market will move tomorrow but I can tell you if you have a 10-20 year time horizon it’ll be a temporary drop (Look at the market 10-20 years ago vs now & we’ve had plenty of drops).
If you’re worried about losing your job in a recession and needing cash…. That’s more of a valid reason for not funding it for a bit.
Do you want to buy assets when they are relatively cheap or relatively expensive? This is the best time to buy.
Also, the person who gave you this “advice” doesn’t understand investing and you should probably avoid listening to them in the future.
You don't know if they are relative cheap or expensive today - you certainly don't know if it is the best time to buy.
When are you planning on retiring? If your answer is not soon then who gives a hoot what happens with the market. Time in the market beats timing the market. Also make sure your contribution is uniform over the year so you take advantage of your employers match. So do the math and see what you need to contribute over the whole year to max it out if your not already doing so.
Buy low, sell high. Time in the market will beat timing the market. Just keep on putting as muc h as you can in 401k
Your first two sentences are contradictory - are you trying to time high's and low's or just staying invested for periods?
This is the problem with trite mantras replacing understanding.
Stocks are on sale - it's a great time to buy, buy, buy!
You don’t make money buying the top.
That's not true at all - people make plenty of money buying a top as long as they have investment horizons that take them to the next one...
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Things being in the red means it would have been wise to have moved out of stocks (which you can do within a 401k - don't know why anyone would advise you not to use tax-advantaged space because of one asset classes performance) before they went down. Of course you didn't get that advice before they went down so not much you can do about that now. As for what happens next, well I assure you the person giving you advice hasn't a clue.
tacotruck2112 t1_jaf0ser wrote
Skate to where the puck is going, not where it is.