Piece of advice - regardless of which way they go for the debt ceiling - I suggest everyone with a 401K CASH OUT immediately! Take the penalty and pay the tax while the bush tax cuts are still in affect! It will be the cheapest tax you pay!
Taxes are going up and soon! Your 401K is tax defferred so when you start drawing from it, you will be paying W2 income on that money at whatever massive rate the gov't bestows upon the working class at that time. The kicking the can down the road idea will wipe you out by then.
Just take a look at these rough numbers - you can certainly check them out online.
As most 401K plan administrators attempt to keep pace with the S&P 500, You should be aware that: Close of the S&P500 in Dec 2001 - 1200 (ish). Close of the S&P 500 in Dec 2010 - 1200 (ish) - yep you guessed it - a F--king no gain for you over that 10-year period. And it is gonna get allot worse - their is no chance the markets will make a meaningful gain over the next 10-years either. Headline inflation - is hovering around 8-9% (and about to explode) depending on who you read (I wouldn't trust the BEA numbers). Combine that with the higher tax rates and it makes the early withdraw fee look pretty insignificant!
So get it out - get it into commodities markets - what ever you know or what ever your comfortable with and plan to start looking at paper again around 2020.
Remember - your NOT DIVERSIFIED in your 401K. The asset classes are:
Your 401 covers ONLY ONE ASSET CLASS - Paper and with the central banks printing money,Sovereign nations going bankrupt, and the still very sick banking system, and the fact that your mutual fund is a 2nd derivative or maybe even 3rd derivative of the money they are printing, that means you are taking on a MASSIVE risk for your future and your childrens future.
Figure this one out (for yourselves) soon guys...before its too late!
Why ynk it out. Convert a chunk of it into cash reserves. If the debt ceiling isn't raised, folks are predicting a major drop in the stock market. Let that happen and then move the money back into stocks. No brainer.
__________________
John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
Cash????? Cash is crashing -- that is why it takes more and more cash to buy a bushel of corn or soybeans or any comodity. You ever heard of "hyperinflation"? the currency goes to zero??? Do you understand that is what is happening??
CASH IS TRASH! and will be until we start excersizing monetary responsibility and restraint. As I don't see ANY of that in the near or distant future - I hold NO CASH.
Your no - brainer gonna cost you dearly!
Here is an idea for you to consider...Invest based on VALUE - not price. If you can't make that transition - you may not be able to preserve your weath in the coming years/months.
Am I missing something but if you cash out, isn't your money still cash? If you don't like real-estate, company stock, cash or bonds, what exactly do you like?
__________________
John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
Your money would be cash for a day or two until you buy another asset with it. When the central banks are printing money around the world - only one asset class is safe - that is hard assets mostly found in the commodities market.
The best?? Silver! - but that is just my opinion. Its way undervalued and in the shortest supply in the history of mankind. Its dirt cheap - infact, I think dirt is worth more right now than silver at 40/oz
If you want to stay in paper - do shorts.
Not all real estate is weak right now - farmland is way up with high grain prices. Allot people beleive its another bubble in the farm land similar to what happened in the early 20's.
I'm not so sure... In the 20's farm land was exploding on leverage (debt - AKA heavy borrowing from banks). Right now - they are mostly cash deals. The only way you get deflation (of a bubble) is if leverage evaporates. If there is minimal leverage to evaporate, its hard to argue or produce evidence of a collapsing bubble...
In a cash purchase scenario - while land prices may go down if all other asset classes are deflating - the land is still cashflowing to the owner. So why sell it. Every other asset class (in this scenario) is going down in price - but the farm land, paid in cash, is still producing grain and thus still producing farm rents and thus still cash flows.
There ARE other things to be afraid of right now buying farm land - but I don't believe deflation is one of them.
So there are two asset classes that are better diversified than a 401K but keep in mind - the best move is to cash it out and pay the tax now at these historic lower rates. Not to wait until the investment goes nowhere and you have to pay higher future taxes when you begin to take it out.
I guess I missing your belief that everyone's only investment is a 401k. Its certainly not mine. Furthermore, it very safe as long as it manage it well. I review my invests and move them around. If you don't have enough choices, complain to your HR and ask for more.
As far a commodities. I bet your only buying paper and not the real stuff. If you look at how much is traded regularly you will find more is traded than ever has come out of the ground.
__________________
John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
I'm taking all my 401K money out and buying hard assets. By "hard assets" I mean bullets and high capacity magazines for my firearms. Based on your guidance, the do-do is going to hit the fan . . . very very soon and it is going to be Armegeddon and society is going to break down and I will be eating my neighbors kids for dinner. I appreciate that shrewd and measured guidance, so the logical conclusion is to get ready. I'm also trying to lay in some equipment like those bad guys have in the Mad Max movie -- those odd dune-buggy kind of vehicles and wierd defensive/offensive equipment. Just want to be ready when civilization collapses.
I don't know. Hyperinflation (alla Weimar republic) doesn't come around very often. I'm thinking you are a little arch in your analysis. Maybe you'll be right. If you ARE right, however, the last of my worries will be the status of my 401K and my wealth.
No fieldmouse - I don't buy derivatives in this market. I only invest in the physical asset!
Your 401K is NOT safe! you just proved it. Its stuck only in derivatives, contains only a single asset class and is going no where. The next financial crisis will take it away from you. If they freeze trading - your screwed, if they close the banks - your screwed.
Everyone knows this is a traders market right now for paper - its not a buy and hold. You can't trade in a 401k as quickly as you would need to make it work.
Plus - lets say your successful and able to outperform the S&P and the DJIA (by compairson) You will not hold a candle to others buying commodities and you will have to pay W2 taxes on botht he principle and the gain someday when its known taxes will be much higher.
Plus you run the risk of paper market crash, currency crash and both.
Its a dumb investment because you can't insure the investment.
And you must pay fee's on your 401K account.
So here is exactly what you are doing - you tell me if this is a good "partnership"...
You are putting up 100% of the money for your 401K. You are "hopefully" going to make 10% (the other 90% goes where??) you going to pay fees all the way up (hopefully up).
And if it goes down, sideways or up 10% - you pay the fees all the same. You pay them if they lose or not.
So I ask you - lend (oops no give) me $10,000 today. I absolutely promise to return to you next year your 10,000 plus 10% (guaranteed) and I will keep the rest - what ever that is - you need not be concerned.
That is actually a much better deal than your 401K and you know me about as well as your 401K plan administrator.
I'll bet your not that niave - now if everyone you knew did the above and all got their money and principle back within a year as promised - you might do it too, and when you get your 10% you might have a enough to buy a new bow. I on the otherhand have enough to buy another farm or perhap two farms.
Now keep in mind - YOU AND YOUR FRIENDS put up all the money - took all the risk and I made enough to buy a farm. You got a bow. That seem fair?
Wow Alastian - your nuts... This country has already had two hyperinflations - the first currency, the continental and the second currency - the confederate. Both went to zero - both caused the evaporation of wealth.
Your idea to buy bullets is a good one - but not for shooting - for trading. When a currency goes to zero - those who have something to trade might become rich. Those that don't - will surely starve.
Your sarcasm illustrates your complete lack of understanding of what a hyperinflation is. Your not worried about your 401K? You could cash it in, buy silver (today) and perhaps purchase an entire city block of appartments with that silver as the currency approaches zero - or better yet - trade an idiot realestate investor who didn't believe a currency crash could ever happen. That would allow you (upon recovery with the replacement currency) to collect rents from your city block, never having to work another day in your life after that. Just figure out where you wanna hunt Jan - Dec.
But thats OK - I don't imagine your that creative or understand anything about printing money or even comprehend how fast a hyperinflation could occur in a country with a fiat reserve currency (something that has never existed before).
Wow Alastian - your nuts... This country has already had two hyperinflations - the first currency, the continental and the second currency - the confederate. Both went to zero - both caused the evaporation of wealth.
Your idea to buy bullets is a good one - but not for shooting - for trading. When a currency goes to zero - those who have something to trade might become rich. Those that don't - will surely starve.
Your sarcasm illustrates your complete lack of understanding of what a hyperinflation is. Your not worried about your 401K? You could cash it in, buy silver (today) and perhaps purchase an entire city block of appartments with that silver as the currency approaches zero - or better yet - trade an idiot realestate investor who didn't believe a currency crash could ever happen. That would allow you (upon recovery with the replacement currency) to collect rents from your city block, never having to work another day in your life after that. Just figure out where you wanna hunt Jan - Dec.
But thats OK - I don't imagine your that creative or understand anything about printing money or even comprehend how fast a hyperinflation could occur in a country with a fiat reserve currency (something that has never existed before).
Sticks and stones may break my bones but your ad hominum attacks will never hurt me.
As I say, I'm not buying that the economic sky is falling. Could I be wrong? Yes. I think the odds lie on my side, however, that in 1 year and in 5 years I'm not going to look back on this and think that any worse economic glitch has taken place than the market perturbation in 2008, 2002, 1987. Each one of those market "adjustments" was significant . . . but the sky did not fall. Only time will tell who is right on this matter -- you or I.
Your 401K
