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September 18th, 2008 at 10:49 am

Between Monday and Wednesday, I've lost almost $1000. My gut reaction is to lower my 401k contribution from its current level of 20% down a few notches, so as to let the money trickle into my checking account that is paying 4.5%.

Of course, before it trickled there, I'd be taxed on it. And then taxed on any interest it makes.

I'm torn: 4.5%, even with the taxes feels like a better deal than the negative 10% I've endured this week.

Then I sigh, and remind myself that I'm in this for the long horizon (15-20 years out) and that any additional contributions will be used to buy these funds at a discount.

If I were to drop to say, 18 percent, what would signal the opportunity to increase back up to the original 20%? Once the stock prices start getting more expensive to buy?

I should just leave it at 20%, be thankful that I'm buying at a discount, and take solace in the fact that I'm debt free and living beneath my means.

Just stinks, because it takes me a LONG TIME to make $1000. =(

5 Responses to “Ouch!”

  1. PauletteGoddard Says:

    My thinking and feeling are similar to yours. My kneejerk reaction was panic, then I thought "I've got enough set aside for cash, and this is for the long-term, supposedly." If you can find a better use for your money and are already saving beyond what you need for retirement, depending on your tolerance level for taxity-taxity-taxity-interest, what's the harm?

  2. merch Says:

    This is an excellent time to look at your risk tolerance. But don't do something because you are scared. Use the fear as a gut check and help determine the proper action. But NEVER allow fear and what ifs to rule you.

  3. cptacek Says:

    Buy low, sell high! It is low! Keep buying!

  4. fern Says:

    Just keep it in there and continue as is, I say. You're young, it's long-term money, try not to watch the financial markets so closely on a daily basis. I know, how can you not?

    85% of my $ is in stocks. Yes it worries me, but if you can ride this out without panicking, the market WILL come back and then you'll see the cream rise to the surface. Well, ok, bad metaphor, but you know what i mean, right?

  5. Lylic Says:

    Looky there, I gained 50% of it back today =P

    Wheee! I LOVE rollercoasters!

    Now if only I could train myself not to watch the markets so closely.

    20 year horizon. 20 year horizon. 20 year horizon...

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