Posts Tagged ‘investments’

Buying Stocks Now- Throwing Good Money After Bad or Smart Investing?

Posted February 26, 2009 by Bernz

It’s now official. The American economy is in recession. The S&P 500 index- a broad-based thermometer of the health of American corporations- has declined almost 50% in the past 18 months.

stockmarketThe volatility of the stock market in the current recession has touched the majority of households. Investing in stocks was once the privilege of the rich, but today, many retirement plans, especially 401(k) plans, contain stock-based mutual funds and the values of these funds have dropped precipitously.

So why would anyone want to buy stocks right now? Surely, it’s time to tuck your money under your mattress and wait it out? Smart investors know better. They are using this time of market fear to pick up great values in stocks. The one thing that stock market performance has taught us over the past eighty years is that it always goes back up. Even in times of economic crisis (remember Black Monday?), the stock market always finds its bottom and begins its climb once again. Over time, the stock market has outperformed any other investment vehicle.

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Making the Right 401(k) Choices

Posted February 3, 2009 by Bernz

Knowing which investment choices are right for you in your 401(k) plan has never been easy, but in the current economic environment, it can be downright torturous. Most funds that are available to choose from in your plan are declining in value and producing negative returns. This is also the case of the stock market as a whole. That means that your job is to select investment funds not to make the biggest return but to lose the least amount of money. Preservation of capital is tantamount during this extended recession.

401kMany investors make the unfortunate choice of trying to beat the stock market. However, it has been proven time and time again that, over time, managed funds rarely outperform the stock market as a whole, regardless of how talented and well-compensated the fund manager is. If seasoned experts cannot beat the market, it is highly unlikely that you will be able to. The best many investors can do is to match the performance of the stock market.  How can you choose investments in your 401(k) that will follow the stock market and preserve your retirement funds? Index funds.

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