Keep throwing good money after bad?

[firemediceric]

I've been contributing $1,000 bi-weekly through payroll deduction to my 457. Like my Roth, which I had fully funded in February for this year, and a taxable brokerage account which I've just been sitting on without adding or taking, the 457 is down 12%.


Does it make sense to keep throwing $1,000 every two weeks into the 457 just to watch it keep going down?

Might I be better off putting those funds, or a large portion of them, into a money market account?


I understand the taxes I'll be paying now rather than later if the money is not going into the 457, but I'm questioning continuing with fully funding the 457 at present. There is no employer match to my contributions.


I appreciate the input of the more seasoned cooler heads.

 

[marko]

Smarter folks than me will reply but I'll assume you're buying stocks, bonds or funds each time. If so, you're getting them at bargain basement prices right now. IMO a once in a decade opportunity.

YMMV

 

[jollystomper]

Off the top of my gray head:
- What is your investment timeframe?
- Does your current AA still allow you to sleep well at night?

If we are talking long term, and you AA is appropriate for your desired level of risk, no need to change.

 

[pacergal]

It is hard to see your account go down, I get it. I learned the hard way, too.
I've been there, early in my career and an investing novice, I stopped my 457 contributions during a downturn, don't remember which one, there have been a few.
Dumb idea. There was a pretty good, quick bounce back, but by the time I trusted it, got the paperwork back in to restart, I missed a good chunk of growth.

Choose an allocation you are comfortable with, stay invested.
How long do you have until your planned retirement? That may guide your decisions now.

 

[RobbieB]

I would keep contributing and that's exactly what I did during the 2008 episode. In fact I shifted my allocation to all equities and bought 3 times as much as before.

When it recovered I was well rewarded -

 

[ut2sua]

OP, some of us will kick ourselves later for not buying into this market (with available extra $). One wants to buy low and sell high, but it is human nature that we all want to buy when it is high and sell when it is low. It sounds to me like you are in your accumulation stage, so this is a good time for you to continue to add to your investment. Good luck

 

[ivinsfan]

When are you actually leaving your Job?


Do you still plan to move somewhere and buy a home?

IIRC you are putting a ot of pension contributions and other savings away. It might not make much of a difference and perhaps you could use some extra cash.



It's a individual choice so it's up to you and what you feel comfortable with. You are suggesting cashing out your positions just taking a pause on some contributions.

 

[Which Roger]

Does it make sense to keep throwing $1,000 every two weeks into the 457 just to watch it keep going down?

If you have a crystal ball and know that it's going to keep going down, then of course not. But nobody knows whether it will keep going down, or go up, or go sideways. But the market is priced to compensate investors for the risk they are taking, and it usually works out that way in the long term. So yes, I would continue to throw the money there.

 

[HarveyS]

keep throwing good money after good money!

 

[Bryan Barnfellow]

Assuming you haven't sold off anything, you still own the same assets as you did previously. It's just that "the market" (=other people) happens to value them lower right now. Time is your friend. Over the coming years those assets, including the ones you are buying cheap now, will likely rise again to equal or exceed the previous high values.

I have found that my comfort level with volatility has adjusted over the last 38 years as I have witnessed both the downdrafts and the subsequent updrafts. For the US, at least, there exists a very vibrant, diversified economy and skilled, creative workforce that will continue to produce excellent long term economic profits for those who invest.

-BB

 

[Montecfo]

Unless you need those funds soon, keep buying at these lower prices. You are lowering your average price, dollar cost averaging.

 

[marko]

"Wall St is the only market where, when the prices go down, everyone runs for the door!". "Be greedy when others are fearful". (either Buffett or Munger

 

[VanWinkle]

Write an Investment Policy Statement that addresses what to do in a down market. Then when the market is down, read your statement you wrote without emotion and follow. It is the only way to make sure you don't do something from emotion only. If you write it today, it may be too conservative, but that isn't the worst thing that can happen.

Good luck to you,

VW

 

[NW-Bound]

Ah, there's no good money anyway. Not when inflation is this high.

 

[Yoheadden]

I get it. It feels like you’re dumping money into a sinking ship. The same thought goes through all of us who are still accumulating(can we still say that, just joking).

The fine folks here have said it better than I could. Just keep dollar cost averaging, have trust in your AA and one day, we will all be happier.

 

[firemediceric]

Thank you all for the advice. I would not cash anything out, I just would not contribute anything further, or reduce greatly my contribution for the time being; however, the consensus seems to definitely be against that though, so I am going to heed the wisdom of those smarter than myself. I’ll leave my bi-weekly contribution just the way it is.

My timeframe for retirement is short, but I don’t anticipate my needing to access those 457 funds anytime soon after entering retirement. I have to leave in 5 years when I am forced out. I hope to leave within the next 2 years. Hopefully things will bounce back and this will all have been just a bad memory by the time I need to access those funds.

 

[punkinhead]

"The local supermarket keeps putting the things I want to buy on sale. Should I stop shopping and wait until prices are higher?"

 

[Chuckanut]

Unless you need those funds soon, keep buying at these lower prices. You are lowering your average price, dollar cost averaging.

IMO, the above is correct. I would not bet the farm on a quick turn around in the next year or two. But, after the run-up we have had over the past few years, this is an opportunity to buy lower and get the better returns one needs to fund future goals. Again, just my opinion.

 

[Magus]

IMO, the above is correct. I would not bet the farm on a quick turn around in the next year or two. But, after the run-up we have had over the past few years, this is an opportunity to buy lower and get the better returns one needs to fund future goals. Again, just my opinion.

+1. Stocks are finally looking attractive for the first time in a long time. Don’t go all in but keep the paycheck contributions coming. I am.

 

[Chuckanut]

+1. Stocks are finally looking attractive for the first time in a long time. Don’t go all in but keep the paycheck contributions coming. I am.

I agree. The problem for people like me is that I no longer have a paycheck.

But, I do still collect dividends, interest and maybe some capital gains. I will keep reinvesting any capital gains that survive, and I will keep the dividends and interest stored in a safe account in the hopes that buying lower will negate the loss of real value to inflation.

High inflation combined with a down market is a double whammy. The Bear at its worst. This is all too familiar to the late 70's and 80's. Be careful.

 

[dunkelblau]

IMO, the above is correct. I would not bet the farm on a quick turn around in the next year or two. But, after the run-up we have had over the past few years, this is an opportunity to buy lower and get the better returns one needs to fund future goals. Again, just my opinion.

Mark Hulbert has a new article on Marketwatch,
https://www.marketwatch.com/story/t...f-22-7-in-12-months-11655224023?mod=investing
"Those who buy stocks the day the S&P 500 enters a bear market have made an average of 22.7% in 12 months"
Usual caveats (1) bear markets vary quite a bit around the average (2) this time might be different, so don't bet the farm, but odds seem to be against "good money after bad".

 

[Jeffman52]

Thank you all for the advice. I would not cash anything out, I just would not contribute anything further, or reduce greatly my contribution for the time being; however, the consensus seems to definitely be against that though, so I am going to heed the wisdom of those smarter than myself. I’ll leave my bi-weekly contribution just the way it is.

My timeframe for retirement is short, but I don’t anticipate my needing to access those 457 funds anytime soon after entering retirement. I have to leave in 5 years when I am forced out. I hope to leave within the next 2 years. Hopefully things will bounce back and this will all have been just a bad memory by the time I need to access those funds.

I would still buy and in fact if your horizon is that far out I would invest even more heavily. This is the opportunity to buy under priced stocks on sale. When the market bounces back (as it has always done) those stocks you bought on sale are going to be worth a lot more.

 

[audreyh1]

You also have time to decide how to finance your first two years of retirement: how much you need, what low volatility investments to keep those funds in, etc.

 

[Chuckanut]

I would still buy and in fact if your horizon is that far out I would invest even more heavily. This is the opportunity to buy under priced stocks on sale. When the market bounces back (as it has always done) those stocks you bought on sale are going to be worth a lot more.

Some [-]Many[/-] people think we are seeing a SALE! on future stock market returns.

 

[Badger]

In 2000 and 2007 when the market had one foot in the toilet and we were still working we continued to max out our 403b and Roth IRA accounts. It was a great time to buy low. Since retired for the past 10+ years we have been moving dividends, interest, and gains into a nice cash buffer to draw from that will last for a few years so we don't have to sell and take a beating. Now we are steppin in high cotton.
We could take advantage of the market today but there is no reason to anymore.

Cheers!