| 401k planners are always trying to convince you and | | | | if you you are still in your 30s or 40s, are putting |
| me that qualified retirement plans are the best thing | | | | money into the market others may be taking it out. |
| since sliced bread. However, 401k plans could turn out | | | | If the number of individuals taking money out of the |
| to be a less than perfect vehicle to save money for | | | | market is more than the number of individuals putting |
| your future. | | | | money into the market, it could temporarily reduce |
| The 78 million Americans that have started retiring | | | | the value of your investments. |
| have brought with them a unique problem. Many of | | | | We've already seen an exaggerated scenario like this |
| these people have money stashed in their 401k that | | | | happen recently. A massive amount of money was |
| they will likely have to use. | | | | being withdrawn from the market and as a result, |
| With money likely to leave the stock market, where | | | | mutual fund managers had to scramble to come up |
| will the new wave of investors going to come from? | | | | with enough money to pay investors. |
| Confused? | | | | In order to raise enough money to meet redemption |
| Don't be. You see, with a little less than 1/3 of the | | | | requests, fund managers had to sell shares. Because |
| population retiring, that means that there will be a lot | | | | these funds hold a substantial amount of money in |
| less money being poured into the stock market in | | | | the market, selling shares of stock can have a |
| the form of contributions... | | | | dramatic downward pressure on the fund as a whole. |
| ...of course, in the future, Americans could start | | | | If you're still in your 30s or 40s, you've probably |
| having babies en mass again, but assuming that we | | | | bought into the "buy and hold" theory. During times |
| don't, we could see a drop in invested money and | | | | like this, that strategy could have cost you a |
| money being contributed to the stock market. | | | | substantial loss. If you continue to buy and hold |
| Some individuals, as they get older, don't want to be | | | | mutual funds in your 401k, you could end up suffering |
| invested in the stock market. That or they want to | | | | a slow decline until the market normalizes. |
| drastically reduce their exposure to the market by | | | | The question is, has your 401k planner told you |
| switching to fixed accounts. | | | | about the risks associated with YOUR retirement |
| What does this mean to you? It means that as you, | | | | account? |