Dow bumped up to the 12.5k limit yesterday and sold a little today. How does that help your 401k? Well, most 401k accounts are designed to buy funds with the expectation of going up... If you are making contributions into mutual funds without regard to the market action, I'm guessing you'll start seeing your account drop over the next couple weeks.
As I've said before, I have my 401K account in a money market fund (cash) - so I don't see any of the up~down action in the market. Does that mean I could miss the next big market move to the upside? Sure does. More importantly, I could miss the big move down. Simply put, I'm protecting my nest egg.
Why do I think this way?
Two reasons:
1) Government debt, and not just the United States. Remember it's a world economy tied to the US dollar and our friends overseas are in a pickle. They owe too much and they're having a hard time getting anyone to loan them money. Much like a game of musical chairs.
2) Regular people are feeling the squeeze. No hiding how expensive everyday items are. Gas, food and basic materials have most of us shaking our heads in disbelief. The economic system is faltering and nobody wants to make needed changes.
My goal for 2012 is simple. I want to make 10% return on my 401k. That's it. Let's not get greedy!
How? The DOW is stuck between 11,300 and 12,500. I'll wait until the DOW get near the 11,400 mark and begin buying mutual funds through my 401K. Let's see what next week brings us...
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