Bryan's Little Corner

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Wednesday, February 28, 2007

BLACK

20 years or so ago I was talked into investing in a 401k. With my situation at the time I took the option to catch up and invested almost all my income for over a month, or was it two, into the 401k. I had a fair amount of money in the market but then October 19th 1987, aka BLACK TUESDAY, came along and stole over halve my money, just up and stole it.



Now our financial guy from where I worked said 401ks were great. You were able to put in tax free money and let that extra money work for you. The investment generally recovers if there are problems, while the markets are high your money is really multiplying, while the markets are low you are able to purchase more stock than you normally can and, once the markets bounce back, you will have more stock to multiply.

By the time I left the company at the end of 1988 my stock had indeed bounced back but not much more but still, I was happy. The new company I work for offered 401k so I jumped in with both feet. A certain percent of my pay goes into it every pay that way should I ever get a raise the amount of money I invest also goes up. It has been working out very well for me.

Then along came 2001 and the markets were doing terrible for some time. Then September 11 happened and so many people lost their lives. The towers fell and the markets went down with them. Some people were hit hard by that, me not as much but still it took forever for things to recover. But during that time things moved forward. Stocks were low and I was able to invest in more stock than I normally could. In the end I finally recovered from this and was doing OK once again and then yesterday.

Yesterday the stock markets took a beating. They were down over 500 points but ended the day a bit better then that. So I printed off my 401k balance so today I can see how bad it really was and, once again buy more depressed stock and wait for things to get better.

I do recognize a pattern however. Black Tuesday back in 1987 was of course a Tuesday. September 11, 2001 was a Tuesday and finally yesterday was again a Tuesday. Looking back the great crash in 1929 was also a Tuesday. I wonder if I can withdraw all my money on Monday nights and hold on to it for a day until Wednesday and the reinvest it again. I would be so much further ahead.

Anyway since it was on my mind I thought I would mention it. Despite the fact that days like yesterday happen, 401k are a bargain. If your company offers one to you consider taking advantage of if. If they offer a match program in 401k then take maximum advantage of what they offer.

They say that if you were to invest money in 401k from the age of 20 to the age of 30, x amount of dollars every pay period, and not invest another penny you would have the same amount or more money then the person that started investing at age 30 and kept investing the same x amount of dollars every pay period until they retire. It really is a good thing to do and the earlier you can get involved, even if it is not very much money, in the long run you will hardly miss the money and you will be surprised how much money you have. When I retire I will not be rich beyond all belief but I will be much better off than I would have been.

Now let me go lick my wounds and see if there is not a way to keep pulling my money out of the market on Tuesdays. Apparently, at least in the stock market, Tuesdays are the new Monday.

Happy hump day.


Ohhh! That was a *horrendous* crash! –The Dukes of Hazzard
8 Comments:
Anonymous Anonymous said...

That's very interesting about each time it was on a Tuesday..
We have a 401k and use Vanguard which I like because they seem to invest conservatively but there's not much you can do when the market drops like this.
The stock market is good if you are in it for the long haul, you usually recover your losses.
tc

February 28, 2007 8:13 AM  
Blogger barman said...

You are so right TC. I lost $10,000 yesterday but I know that it will recover. I also know I plan to stay at my job, provided I do not get laid off or anything, for another 7 to 8 years at least. That is plenty of time for things to bounce back. In a few years I will make adjustments to where I am invested a lot less risky. It does not make as much money but it also does not lose 10k over night on you.

February 28, 2007 9:46 AM  
Blogger Suze said...

This scheme sounds like a really good idea. Unfortunately they don't do anything like this over here. Shame really because our pensions on retirement are going to be worth nothing.

February 28, 2007 3:00 PM  
Blogger barman said...

Suze I have a pension too but at whim they could cut it out. If I were union that could not be the case but I am not.

February 28, 2007 4:57 PM  
Blogger wmy said...

Hiyaaaaa
Ok, first, what is a blog rolling ping page?? I had to get that question in...now I will go read your post and be back in a bit...

February 28, 2007 9:13 PM  
Blogger wmy said...

Alright, I am back...
You know, I always learn neat little tid bits when I visit your page...like the womans voting day in history thingy, and now this whole Tuesday conspiracy...Wouldn't that be great if you could just show up...say. "I will take my money please...see ya in two days" and skip over the whole stock market crash thingamabob?? Yep, that would be sweet. I am sure if anyone can figure a way to do it, it will be you...pass that info along when you get it k?!? lol

February 28, 2007 9:20 PM  
Blogger SignGurl said...

I have no 401K. I work as an independent contractor so I work for me at least on paper.

I'm glad you have been so wise as to invest in your future. Retirement will be a breeze for you.

March 01, 2007 8:18 AM  
Blogger BTExpress said...

Bryan, check your email.

March 01, 2007 12:55 PM  

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