Don't sell the stocks in your retirement portfolio because of the drop in the market!

[corn18]

I'm not retired, of course, but at the end of 1999, our portfolio was worth $152,896. At the end of 2013, it was worth $712,968. So despite that "flat market" and us being about 80% in stocks, we managed to increase our wealth by 4.6 times. I'm okay with that.

But, DS, how is that possible? Clearly a dollar put in in 1999 would be worth $1 in 2013. You didn't keep buying when the market crashed did you? Shame on you for gambling like that.

[disneysteve]

But, DS, how is that possible? Clearly a dollar put in in 1999 would be worth $1 in 2013. You didn't keep buying when the market crashed did you? Shame on you for gambling like that.

Not only that, but the chart leaves out pesky little details like dividends and capital gains that got reinvested over that period. So if you invested $1 in 1999, you had quite a bit more in 2013 even if you never added a penny of new money into your account.

[corn18]

"The dividend stock, the old faithful of the equity investment world, might seem a little bland at first. After all, dividend-generating companies tend to be older and less volatile than exciting high-growth companies. Nonetheless, consider this bit of wisdom from legendary investor John Bogle:

” If you invested $10,000 in the S&P 500 Index when it was first created in 1926, you would have had $33.1 million dollars by September 2007 — but only if you’d reinvested all your dividends. If you didn’t reinvest them, your portfolio would have been worth only $1.2 million.”

Even if you only started investing in the S&P 500 in 1990, the benefits of dividends are pretty clear. The graph below shows the difference between the S&P 500 with reinvested dividends (the orange line), and the S&P 500 without those reinvested dividends between 1990 and today. The margin is pretty wide!"

[Gailete]

At year end 2010 my IRA was worth $4296.73, haven't put another penny into it, but did reinvest all dividends, etc. and at year end 2017 it was worth $12796.45. Even though technically I could tap the money any time, I want it to grow much more as possible, as I also want for my Roth IRA.

The interesting thing about these stock drops, is being mindful of where we have come from. Last year since I never seemed to be able to find an easy way to compare The DJ closing amount so I started noting it every Friday as well as wild and wooly drops like recently. The ending amount of the stock market today was almost the same as January 4, 2018 when everyone thought it was a grand amount to have climbed to. Then today, two months later, some see themselves selling apples in the street. It is all relative. I have no intentions of touching my IRA unless I absolutely have to or when forced to when I hit 72, which gives it about 10 more years to grow. In the meantime, I save what I can, and am trying to learn to live on the amounts that we do have coming in. Get the bills paid. I'm not trying for a million, but I do want some cushion when we can't run our businesses anymore.

[disneysteve]

I have no intentions of touching my IRA unless I absolutely have to or when forced to when I hit 72

You must start drawing from your traditional IRA in the year in which you turn 70-1/2, not 72.

[corn18]

I'm not trying for a million, but I do want some cushion when we can't run our businesses anymore.

Brings up an interesting question for those running their own business. What is your exit strategy? I know Texas says he works a few hours a week, but what about when you are 80? or have dimentia? Or cancer? Do you just stop working and the income stops? Do you sell? When do you sell? What do you do with the money after you sell? Give the business to your kids? What if they don't want it?

Me, I simply stop working and spend my savings.

[bjl584]

Brings up an interesting question for those running their own business. What is your exit strategy? I know Texas says he works a few hours a week, but what about when you are 80? or have dimentia? Or cancer? Do you just stop working and the income stops? Do you sell? When do you sell? What do you do with the money after you sell? Give the business to your kids? What if they don't want it?

Me, I simply stop working and spend my savings.

If you are smart, I suppose you employ others to run your affairs to the point that you don't have to be involved in day to day operations at all. You might not even need to be alive. You can build a legacy that cash flows whether you are above ground or not.

[TexasHusker]

Brings up an interesting question for those running their own business. What is your exit strategy? I know Texas says he works a few hours a week, but what about when you are 80? or have dimentia? Or cancer? Do you just stop working and the income stops? Do you sell? When do you sell? What do you do with the money after you sell? Give the business to your kids? What if they don't want it?

Me, I simply stop working and spend my savings.

This is actually a very good question. Certainly I hope that my kids would like to be involved in my businesses some day, but they might not. If you aren’t mentally or physically able to tend to your business, you then sell the business. Fortunately, my businesses do not require my daily management, but at some point one still might not have the mental faculties to do it.

I personally have diversified into real estate so that there are hard assets that produce income and are hopefully appreciating in value. We hope to continue building our real estate portfolio.

Regardless of what you invest in, we all have to have a plan for what happens if we are incapacitated. My dad has Alzheimer’s, so I have stepped in to handle his affairs. Ironically, he also now owns a vacation rental, not to vacation in, but help pay his expenses.

[disneysteve]

Brings up an interesting question for those running their own business. What is your exit strategy?

I think it will vary based on the nature of the business. Some businesses are relatively hands-off like TH's. Some are very hands-on. Some are big with numerous employees. Some are very small or even one-man-shows. Some have value that could be sold. Some don't.

This is a great question though that every business owner needs to think about and have a plan for.

[greenskeeper]

company matches the first 6% 100%, so that's doubling my money just by participating

[disneysteve]

company matches the first 6% 100%, so that's doubling my money just by participating

That's a sweet match. I get 50% which is still stupid to pass up but so many people do. I got almost $4,000 of free money last year. I've already gotten $1,200 this year.

[Jluke]

bought 10 shares of BRKB (Berkshire Hathaway) near the close today.

See what Friday brings....

[greenskeeper]

That's a sweet match. I get 50% which is still stupid to pass up but so many people do. I got almost $4,000 of free money last year. I've already gotten $1,200 this year.

Yes anyone who doesn't take free money is foolish.

I get it all the time from co-workers that say "i can't afford the deduction from my pay"

No. You can't afford NOT to take it.

[TexasHusker]

Yes anyone who doesn't take free money is foolish.

I get it all the time from co-workers that say "i can't afford the deduction from my pay"

No. You can't afford NOT to take it.

The match isn’t quite free: you are forced to tie up your money in investments that might prove to be quite mediocre.

[disneysteve]

The match isn’t quite free: you are forced to tie up your money in investments that might prove to be quite mediocre.

Some plans do offer less than the best funds, but I think that has steadily improved over time. Plus, when you're getting a 50% or even 100% match, the fund would have to really suck to not be worth investing. But by all means do your homework and choose your investments carefully. And definitely don't just go with the default that they put you in with auto-enrollment because they usually pick the most conservative option and it's up to you to change it.