How to retire at 55 instead of 65 or 70.

[poncho62]

I don't smoke or drink, probably saved a ton of money with those two....That said, I could have done better. Still have to work part time to make ends meet, but enjoy it for now.

 

[RSKY]

I have lost a ton the last week. But I am still not down to the point I was a year ago.

NOW is the time to go in to your payroll office and up your 401k contribution to the max for the next couple of months. Why, because the market ALWAYS comes back. And the money you will be putting in will buy more shares that will regain the 4-8% they have lost in the past week or so.

NOW is the time to change your investments to large cap growth funds. The market will start a rebound next week at the latest (I hope). And there is money to be made.

Just remember, you haven't gained, or lost, anything until you take it out. All you are doing is watching the market play with itself.

RSKY

 

[Rock Crawler]

What I did was jerked 100% of my 401K funds over to a bond account last week, I saw this coming and want to hold onto as much of these gains as I can. When I see things start to stabilize and ramp back up, I will slide back into the market based funds and ride that wave up. I keep track of the available market funds that are presented to us in our Fidelity account daily in a spread sheet, so I track the up/down motion. I am not going do what people in 2007/2008 did that stayed in the market thinking it would stop dropping. If those folks had jerked over to bonds to minimalize the loss, and then slid back over to the stock based funds after the smoke cleared, they would be many 10's of thousands of dollars ahead of the game. I was not in a 401K then, but the guys I was working with were. I saw grown men cry as their retirement fortunes withered away before their eyes. I saw a handful of them forced to delay retirement for 5+ years because the plan was crushed. I want to keep an eye on this and not be them.

The bond I moved to in Fidelity is called "Capital Preservation" :

Objective
To preserve principal while providing a more secure, fixed income yield.

Strategy
Invests in diversified, income-oriented investments which are intended to produce stable principal value for the fund. The fund uses insurance wrap contracts to help minimize, within certain confined limits, any market volatility in the fund investments.

Risk
The Contracts and securities purchased for the fund are backed solely by the financial resources of the issuers of such Contracts and securities. An investment in the fund is not insured or guaranteed by the manager(s), the plan sponsor, the trustee, the FDIC, or any other government agency. The Contracts purchased by the fund permit the fund to account for the fixed income securities at book value (principal plus interest accrued to date). Through the use of book value accounting, there is no immediate recognition of investment gains and losses on the fund's securities. Instead, gains and losses are recognized over time by periodically adjusting the interest rate credited to the fund under the Contracts. However, while the fund seeks to preserve your principal investment, it is possible to lose money by investing in this fund. The Contracts provide for the payment of certain withdrawals and exchanges at book value during the terms of the Contracts. In order to maintain the Contract issuers' promise to pay such withdrawals and exchanges at book value, the Contracts subject the fund and its participants to certain restrictions. For example, withdrawals prompted by certain events (e.g., layoffs, early retirement windows, spin-offs, sale of a division, facility closings, plan terminations, partial plan terminations, changes in laws or regulations) may be paid at the market value of the fund's securities, which may be less than your book value balance.

 

[Creamer]

What I did was jerked 100% of my 401K funds over to a bond account last week, I saw this coming and want to hold onto as much of these gains as I can. When I see things start to stabilize and ramp back up, I will slide back into the market based funds and ride that wave up. I keep track of the available market funds that are presented to us in our Fidelity account daily in a spread sheet, so I track the up/down motion. I am not going do what people in 2007/2008 did that stayed in the market thinking it would stop dropping. If those folks had jerked over to bonds to minimalize the loss, and then slid back over to the stock based funds after the smoke cleared, they would be many 10's of thousands of dollars ahead of the game. I was not in a 401K then, but the guys I was working with were. I saw grown men cry as their retirement fortunes withered away before their eyes. I saw a handful of them forced to delay retirement for 5+ years because the plan was crushed. I want to keep an eye on this and not be them.

The bond I moved to in Fidelity is called "Capital Preservation" :

Objective
To preserve principal while providing a more secure, fixed income yield.

Strategy
Invests in diversified, income-oriented investments which are intended to produce stable principal value for the fund. The fund uses insurance wrap contracts to help minimize, within certain confined limits, any market volatility in the fund investments.

Risk
The Contracts and securities purchased for the fund are backed solely by the financial resources of the issuers of such Contracts and securities. An investment in the fund is not insured or guaranteed by the manager(s), the plan sponsor, the trustee, the FDIC, or any other government agency. The Contracts purchased by the fund permit the fund to account for the fixed income securities at book value (principal plus interest accrued to date). Through the use of book value accounting, there is no immediate recognition of investment gains and losses on the fund's securities. Instead, gains and losses are recognized over time by periodically adjusting the interest rate credited to the fund under the Contracts. However, while the fund seeks to preserve your principal investment, it is possible to lose money by investing in this fund. The Contracts provide for the payment of certain withdrawals and exchanges at book value during the terms of the Contracts. In order to maintain the Contract issuers' promise to pay such withdrawals and exchanges at book value, the Contracts subject the fund and its participants to certain restrictions. For example, withdrawals prompted by certain events (e.g., layoffs, early retirement windows, spin-offs, sale of a division, facility closings, plan terminations, partial plan terminations, changes in laws or regulations) may be paid at the market value of the fund's securities, which may be less than your book value balance.

Oh so you are the one that caused this pulling all of your money out of the market!

 

[MossRoad]

What I did was jerked 100% of my 401K funds over to a bond account last week, I saw this coming and want to hold onto as much of these gains as I can. When I see things start to stabilize and ramp back up, I will slide back into the market based funds and ride that wave up. I keep track of the available market funds that are presented to us in our Fidelity account daily in a spread sheet, so I track the up/down motion. I am not going do what people in 2007/2008 did that stayed in the market thinking it would stop dropping. If those folks had jerked over to bonds to minimalize the loss, and then slid back over to the stock based funds after the smoke cleared, they would be many 10's of thousands of dollars ahead of the game. I was not in a 401K then, but the guys I was working with were. I saw grown men cry as their retirement fortunes withered away before their eyes. I saw a handful of them forced to delay retirement for 5+ years because the plan was crushed. I want to keep an eye on this and not be them.

The bond I moved to in Fidelity is called "Capital Preservation" :

Objective
To preserve principal while providing a more secure, fixed income yield.

Strategy
Invests in diversified, income-oriented investments which are intended to produce stable principal value for the fund. The fund uses insurance wrap contracts to help minimize, within certain confined limits, any market volatility in the fund investments.

Risk
The Contracts and securities purchased for the fund are backed solely by the financial resources of the issuers of such Contracts and securities. An investment in the fund is not insured or guaranteed by the manager(s), the plan sponsor, the trustee, the FDIC, or any other government agency. The Contracts purchased by the fund permit the fund to account for the fixed income securities at book value (principal plus interest accrued to date). Through the use of book value accounting, there is no immediate recognition of investment gains and losses on the fund's securities. Instead, gains and losses are recognized over time by periodically adjusting the interest rate credited to the fund under the Contracts. However, while the fund seeks to preserve your principal investment, it is possible to lose money by investing in this fund. The Contracts provide for the payment of certain withdrawals and exchanges at book value during the terms of the Contracts. In order to maintain the Contract issuers' promise to pay such withdrawals and exchanges at book value, the Contracts subject the fund and its participants to certain restrictions. For example, withdrawals prompted by certain events (e.g., layoffs, early retirement windows, spin-offs, sale of a division, facility closings, plan terminations, partial plan terminations, changes in laws or regulations) may be paid at the market value of the fund's securities, which may be less than your book value balance.

Its bad advice to tell people to try and time the market. Most people can't and get out too late and get back in too late. They lock in some losses and miss the buying opportunity as the market comes back.

In 2008 we left everything in and kept contributing as we planned. By 2010 we had regained our losses, and by 2012 we had doubled the entire thing. So, to repeat that... If we had $100,000 at the start of 2008, and it went down to $66,000, we'd have gotten back to $100,000 by 2010, and we'd have had $200,000 by 2012.

If we had pulled it out right at the drop, we'd have had $100,000. But we wouldn't have bought any shares during downswing when they were cheap, and missed out on all of those cheap shares that we purchased between 2008 and March of 2009 when it started back up again. And most people would not have gotten back into the market until June or July of 2009 at the earliest, and missed out on all those gains.

Come up with a long term plan and stick to it. Don't try to time the market. That's the advice we were given several times over the years, and I'm glad we stuck to it.

 

[RedNeckGeek]

What I did was jerked 100% of my 401K funds over to a bond account last week, I saw this coming and want to hold onto as much of these gains as I can.

I can see several problems with that strategy. We're currently in a rising interest rate market, and bonds lose value as new bonds are issued that offer higher interest rates. A few years ago I lost thousands of dollars as I saw my bond fund values dwindle when the Fed started raising interest rates. That will continue this year with either three or four raises predicted. It's also next to impossible to "time" market moves such that you can always switch between falling instruments to those that will rise. I dodged a huge bullet when I went to almost all cash immediately before the crash of '08, but I also missed a huge advance by not putting it back into the market soon enough. Finally, I don't know about Fidelity, but most funds have limits on the number of times trades in and out of the fund can be made, and also minimum durations that investments must be held. That's one of the reasons ETFs have become popular: No trading limits. I wish you luck, but these days I just use an ETF indexed to the S&P 500 for most of my portfolio, and buy a little extra going into and coming out of dips.:2cents:

 

[Rock Crawler]

Yep, my 401K being pulled shocked the global market :laughing:

 

[MossRoad]

I was also told never to buy bond funds. Individual bonds, yes. Bond funds, never.

 

[RSKY]

I had a bond fund that did very well one year. It was investing in more than bonds but mostly bonds. I don't remember the details. Then it dropped to 2% or less and I got out.

I usually move a little around if I think something is going to happen but not a wholesale sell everything and circle the wagons deal. I just rebalance and up the amounts in value funds and decrease the amounts in the riskier growth funds. Something on the line of 60/40 growth/value to 40/60 growth value.

This one has caught me not expecting anything.

OUCH!!

I am back to where I was in December after having a month of spectacular growth.

Oh well, it's just figures on a screen until you cash it out anyway.

RSKY

 

[MossRoad]

And while it was the largest single day point drop, it was barely in the top 20 for single day losses. And today it came halfway back. Don't panick. Stick to your plans.