Investing in the Stock Market

October 21, 2008

Why did you stop investing the market? That’s the question I received from several readers after I mentioned we had been hoarding cash in our ING account and would start investing it again through our new Zecco account.

IRA & 401k Contributions Halted

At the beginning of August I dropped my 401(k) contribution down to the minimum to get the match and stopped contributing entirely to our IRAs.

Almost all of our investments for the last 10 years have been into retirement accounts so we can’t touch that money for decades. We invested early and often into these accounts and if they grow as we hope they will for the next 30 years we should have a decent amount when we retire.

Changes in Investments

I decided that we needed some more accessible funds so I stopped the IRA investments and cut the 401(k) contributions way back. My wife did not agree with these changes but it turns out they may have saved us some money. Had I continued the investments that money would have taken a big hit over the last month. Instead it was accumulating in a high-yield savings account.

Now the plan is to put that money back into the market, maybe long-term it will help offset some of the losses our existign portfolio saw recently.

Retirement Savings?

At some point in the future we will ramp our IRA and 401(k) contributions back up but for now we are investing in non-retirement accounts that will be accessible when we need the money over the next 10-15 years.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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8 Responses to Investing in the Stock Market

  • Daniel

    Armen, We are not talking about investments, we are talking about retirement funds, funds that are not going to be touched for a while. It is a mistake to cut your retirement funding just to have more cash at hand.

    The way I have read it, you should contribute no less than 10% of your gross income to retirement and have at least 6 months of funds to live off of. Ben’s posting from what I read is that they do not have a sufficient amount of funds for living expenses and therefore decide to cut funding retirement just to have more cash at hand.

    This is the best time to continue to contribute into retirement, but as Bill said, sounds like Market Timing.

    Sell Low buy high eh?

  • Armen Shirvanian

    It looks like it is a reasonable idea to pull back on those investments that may not appears as reliable, and to put the investment into somewhat shorter-term entities that have less risk of not being available at the time of use. Being flexible with decisions like this tends to be a positive behavior pattern.

  • marci

    I invested more, and I upped my 401K – both to hopefully take advantage of any possible upturn. But then, I’m closer to retirement – 6 mos to 6 yrs depending on when I want to give up my free company paid health insurance…. not!

  • Shadox

    Well – when the stock market is as down as much as it is, you have to believe that long term savings will generate pretty impressive long term returns. I would continue the retirement contributions at the same level, at least over the next few months.

  • Bill

    are we market timing now?

  • Daniel

    Personally I believe it is a big mistake cutting back on retirement unless your about to live on the streets. I would think it is best to cut personal expenses and use the money saved there for an emergency fund.

    btw, how much of your gross income is being invested to retirement now?


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