I'm 61 and as close to being retired as you can get - what happened yesterday in the stock market was as predictable as snowfall this winter here in Pennsylvania. It is coming, we don't know how much or exactly when but it happens every winter. If we accept that there is a number of people that make money on volatility called traders and a news media that loves a good story we understand the hype. "Please Joe expert tell us what is the impact to the average person...well they took an 8% hit to there 401k...it's terrible" thanks Joe for your brilliant insight. but there's a problem a sizable portion of our populace doesn't have much or any thing at all in the stock market
The average balance in all 50 million 401(k) accounts is just over $60,000, according to the Employee Benefit Research Institute. Even people within 10 years of retirement have saved an average of only $78,000, and more than a third of them have less than $25,000. More than half of U.S. workers have no retirement plan at all.
Your probably saying yeah but 8% on what ever you have is significant. True but just like Spring eventually it will get warm again. I can't tell you exactly when but the daffodils will let you know.
I invest for income I buy (and almost never sell) dividend producing ETFs, mutual funds and individual stocks. My theorem is that dividend income is generally less volatile than the market in entirety. Portfolio values while reassuring are really not that important if SS and your dividend income will carry you. We are debt free and live frugally.
Factors that contribute to the panic... Debt! People who carry credit card balances in the U.S. Have an average balance of $15k (that's $3,000 in interest each year). I mention that because who is more likely to panic the debt free guy/gal with 6 months in emergency funds or the the guy who is drowning in consumer debt? Truism: reduce your expenses and you reduce stress!
I can't help but think we Americans need to focus on long term thinking and being fiscally strong. You get there by exercising fiscal discipline in all things... Sadly I don't see much of it but, when I do I feel - hey there is hope and we are not alone.
Last thought, if you saved that $3k year/ $270 a month in credit card interest for 30 years and put it in a mutual fund...well after 30 years you'd have one heck of a pile...consumer debt is the enemy.
Sent from my iPad using Early Retirement Forum.
The average balance in all 50 million 401(k) accounts is just over $60,000, according to the Employee Benefit Research Institute. Even people within 10 years of retirement have saved an average of only $78,000, and more than a third of them have less than $25,000. More than half of U.S. workers have no retirement plan at all.
Your probably saying yeah but 8% on what ever you have is significant. True but just like Spring eventually it will get warm again. I can't tell you exactly when but the daffodils will let you know.
I invest for income I buy (and almost never sell) dividend producing ETFs, mutual funds and individual stocks. My theorem is that dividend income is generally less volatile than the market in entirety. Portfolio values while reassuring are really not that important if SS and your dividend income will carry you. We are debt free and live frugally.
Factors that contribute to the panic... Debt! People who carry credit card balances in the U.S. Have an average balance of $15k (that's $3,000 in interest each year). I mention that because who is more likely to panic the debt free guy/gal with 6 months in emergency funds or the the guy who is drowning in consumer debt? Truism: reduce your expenses and you reduce stress!
I can't help but think we Americans need to focus on long term thinking and being fiscally strong. You get there by exercising fiscal discipline in all things... Sadly I don't see much of it but, when I do I feel - hey there is hope and we are not alone.
Last thought, if you saved that $3k year/ $270 a month in credit card interest for 30 years and put it in a mutual fund...well after 30 years you'd have one heck of a pile...consumer debt is the enemy.
Sent from my iPad using Early Retirement Forum.
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