Quote:
Originally Posted by alnorth
I'm aiming very high. Right now I save 20%, invested very aggressively (I'll dial it back in a couple decades when I'm closer to retirement), and I hope I can hit the max that you can put into a 401k per year either next year or the year after.
|
Quote:
Originally Posted by alnorth
A lot of people had that attitude and sold at the absolute bottom 3 years ago, completely missing the rebound, and again last year at another low.
I do not believe in market timing AT ALL. People who try to get cute with timing buy high because they read the news about how awesome the market is now and they want to get in on that, and sell low because they are depressed and think the dow is going to zero, and they lose money.
Since the great depression, the market (including dividends) has never lost money over any 10-year time span. Since the depression, the market has never made less than inflation in any 15-year time span.
I have roughly 30 years. I'll think about pulling back when I've got less than 10 years left. Buy and hold, diversify, mutual funds, rebalance every once in a while, and laugh at bad news. When the market crashed a few years ago, I doubled my contribution.
|
I invest similarly to you. I have 40+ years until I will access the money I am stashing away so I am in 100% equities and most of them with high risk ratings. I can afford those risks and because of 2008 and beyond I've bought many of the funds at cheap prices. Of course with regular (every 2-week) investments into the 401k it's all dollar-cost averaged.
I max out my 401k and in November I'll get the full company match ($0.75 on the dollar up to 8%.. currently I get $0.375 on the dollar up to 8%). In 2008 they reduced the company match and have slowly added it back so hopefully in another couple of years it will return to $1 for $1 match up to 8%.
You should look into opening a Roth IRA in addition to your 401k. That way you have both a tax-deferred and tax-free retirement account. I max out my Roth IRA every year but usually in a single transaction so it's not dollar-cost averaged.
The market is volatile, yes, but a loss isn't a loss until you realize it and I have 40 years to wait. On some of my investments I'm up 25% and in others I'm down 35% but overall I'm up about 9%.
My focus the past 2-3 years has been to shift funds from my taxable liquid account (i.e. money market, checking, savings) into retirement accounts. The highest interest rate I can find for cash is around 1% which is a loss against inflation so I'd rather my money be in tax deferred and tax-free retirement accounts earning a higher return.
Now that I'm done with my MBA (and the $20k per year in tuition) I can grow both my retirement and liquid savings.