I just can't believe that I'm gonna get fucked on this deal.

[Vickers]

I am not a financial person. I don't understand derivatives and leveraging and all of the other financial terms being bandied about here the last couple of weeks.

I am a technical person, and I can fix just about anything (except plumbing!). I just never "got" the big-picture financial thing.

But, I'm not stupid about personal finances: I know how to balance a checkbook and transfer funds online and make change in my head, and I have had a credit card for over 20 years and have paid it off in full every month (never had a fee). I've been putting into a 401k since 1991, and the last 10 years my wife and I have put in the maximum allowable amount in our respective IRAs. I put an extra $200 a month toward the principal of my house (we are almost halfway paid off after 9 years), and we put money away every month toward our kids' college funds.

We have been careful our whole lives and have planned for the future, and suddenly it looks pretty bleak. I just checked my 401k and it is down 24% since January.

I am just so frustrated...I thought we were doing everything right, and apparently no matter what happens with the bailout (and I refuse to call it a "rescue"), my life savings will probably be wiped out or at least substantially depleted.

I'm not even sure why I'm posting this. I'm just pissed off.

[Eric J in MN]

1. Maybe your 401K will be better a year from now. NT

NT

[mrreowwr_kittty]

12. He may recoup some, or most of what he lost but he'll still be behind.

401ks and IRAs were sold to people as the market's magic alternative to defined pensions. They'll show you a projection based on 6 to 8% of steady gains every year and it looks like you'll retire as a millionaire. But they don't show you how losses when the market is down set you back and how long it can take before you are ahead again. History is not the best predictor, either. That mutual fund you bought that has gone gangbusters for the past 10 years may not perform so well in the future. I have nothing against investing per se, but people are being told to put their retirement security in a giant casino and it's just wrong. We need a social safety net, not glorified gambling.

[tama]

19. 401 system

is definately among the worst decision-catastrophes ever made in America.

People's futures owned by the casino.

[Virginia Dare]

29. It's past time to repeal the Taft-Hartley act..

that has been a thorn in the workers' side for a long time, and is one of the evils that brought us the 401(k) which essentially handed our pension plans over to Wall Street.

[slackmaster]

31. Nobody with a 401k is being forced to invest in the stock market

Every plan I've seen had alternatives including bond funds and money-market accounts.

[sendero]

36. Exactly..

... why the bullshit excuses? Put your 401K contributions in a money market fund, it's not 100% safe but it's a lot safer than the stock market.

The pigmen have been selling the 'buy and hold' bullshit and the 'if you don't buy stocks inflation will eat your money' crap and people believe it.

Better to lose a few percent to inflation than 40% to a downturn.

[leeroysphitz]

35. The house always wins.

[mike_c]

2. you've been an exemplary player in a rigged game....

I really don't think there is any justice at all.

[closeupready]

3. Have you lost principal?

?

[Barrymores Ghost]

6. I have...to the tune of 10%. The other 8% lost was earnings.

But I'm not touching anything...yet.

[Ichingcarpenter]

4. Hold on if you can make it through until Obama's 2nd year

you could be fine.

[kick-ass-bob]

5. How far away are you from needing your 401k?

If it's 10+ years, stop checking your balances.

Unless it all collapses to nothing, you will be OK long term.

[Lance_Boyle]

7. But won't you feel great about it

when the folks down the street who borrowed over their heads to have the same things you worked and saved for get to keep theirs? You're gonna get fucked and lots of other people are gonna profit off your fucking. I've been called illiberal for balking at this notion of taking from the responsible to give to the irresponsible, but I don't really mind name-calling nearly as much as I mind being expected to buy a house for the Joneses.

[mrreowwr_kittty]

14. No is asking you to buy a house for the Joneses.

All we're asking is for them to have their mortgages renegotiated into something they can afford. The family wins because they can stay in the house and the banks win because they are still getting some money and not having yet another devalued house on their inventory.

[Llewlladdwr]

47. That's exactly what your asking.

I'd love to have my mortgage renegotiated into something more affordable. Unfortunately, since I've been foolish enough to live within my means I'm just screwed. Tell me what the fuck I win in your scenario.

[ContinentalOp]

51. Yeah, if we're going to renegotiate people's mortages, we need to renegotiate ALL mortages.

I'm self employed. What's to stop me from refusing to take new jobs for a month or two, making it look like I'm out of work, taking all of my cash out of the bank, and then saying that I can't afford my payments anymore?

[smoogatz]

8. Dow 3,000 by this time next year.

You heard it here first. Batten down the hatches and hope the government can do something about the hyper-inflation that's coming down the pike like a runaway semi. That's going to be the killer, unless they can figure another way out of the current mess besides printing a shitload of dollars.

[Naturyl]

9. Sorry to hear this. But the stock market involves risk.

Americans have been misled to believe that 401k's are very secure. They are not. Any stock market investment is a form of gambling.

I hope you can recover. Unless you've lost principal, you may be able to wait it out and come out okay.

[wvbygod]

11. Only those that benefit from your loss will call you names

Those that share in your loss likely will not.

[CountAllVotes]

15. Any stock market investment is a form of gambling.

and yes, when you gamble you can win or lose. You can play this game or refuse to play it is my understanding.

Said 401K is likely big anyway I'd think. Losing ~25% is not the end of the world. How much has the OP made on this investment over the years?

:dem:

[girl gone mad]

41. If the rescue is seen as a bailout of the stock market..

stock prices may never recover.

High risk is what has made stocks a better investment than bonds over time. Take away the risk and stocks could trade like bonds.

[canoeist52]

10. Our family story too

I'm furious we did everything prudently.

saved for kid's college---then no help from federal so daughter quits school

401K- don't even dare look

been paying credit cards in full for 20 yrs--now they're scamming us with bogus late fees

Buying clothes at Salvation Army



We will buy nothing that we don't need until jobs come back to U.S

[Uben]

13. Hang on, bro

It'll come back. I know how you feel, I lost $30K yesterday! The worst thing to do is panick. The market is already back up 341 points as I write this, and we haven't even seen the new bill yet! Once the dems get the Wh in a few weeks, things will get a lot better. History is on our side. The market always does better under Dem rule.

I am so confident that I put another 5K in Citigroup today. It is up an unbelievable 16.68% as I write this.

There are some tremendous bargains right now. I know it's a risk, but....nothing ventured.....


I was afraid to even look at my portfolio yesterday evening, and what I saw wasn't pretty, but it was not as bad as I had expected.
I am optimistic after seeing today's rebound. We could see the whole 777 points recouped by weeks end if we get a bill passed.

[tama]

20. Some people will never learn

This crisis is just the prelude of what will be known as the post-peak collapse. There is no unlimited growth in limited environment, and the limits of growth are being hit now - or rather were hit decades ago and current situation is a nightmere of overshoot.

[Uben]

34. You may be right

But I seriously doubt it. We live in a world of expanding population/expanding markets, kinda like the expanding universe. We are constantly getting larger, as is the market itself. In today's world, people save via 401Ks, and that pumps money, non-stop into the markets. Every week billions of dollars are invested. In order to stop the expansion of the market, you would have to stop the 401K contributions of millions and millions of people. Without a viable alternative, that is not going to happen, so your theory on no unlimited growth is pure bullshit. History proves that I am right and you are wrong.

I have made my fortune in the last twenty years, nine of which I have been retired (at age 45). People who freak and panic lose every time. History. Read it, learn it, practice it. I am set for life, with very safe investments, but I have a sizable amount of funds to speculate with. When you realize the vast amount of cash that is put in the market everyday, you might understand that it will continue to expand. As of now, there is no other alternative other than people stuffing money under their mattress where there is zero growth. So, don't try to act like you know what's going on. You obviously don't.

[tama]

40. Physics

states (second law of thermodynamics) that there is no perpetuum mobile.

What you call "proof of history" is nothing but a false analogy, equal to claiming that "because the volcano has not erupted so far, it never will", or even better, "because I have not died so far, I never will".

[Uben]

43. Using physics to argue investments?

Try using math. About 70% of eligible workers participate in 401K plans. Until this number drops greatly, the market will enjoy a massive infusion of cash on a daily basis. Population expansion adds another 150,000 potential employees every month, and that, in turn, adds a potential 105,000 contributors to 401Ks every month. That's another potential 1.25 million contributors a year! (these are U.S. numbers and do not reflect foreign investment in the U.S. market.)

This is a tidal wave of money going into the market everyday. I tell you what.....you take your money out of the market, and I'll continue to contribute, and we'll see who does best, K? History shows that even if you had invested your money the day before Black Friday, you would still have done better than keeping it in a traditional savings account.

Until another investment medium replaces the 401K plans that have, in turn, replaced the pension plan, the market will expand exponentially.

[tama]

44. Well

it is fascinating how the cornucopian economists think that laws of physics don't apply to their theoretical models and are genuinely surprised that anyone might even suggest that even they haven't invented a perpetuum mobile.

As for 401K, unemployment is on the rise, the largest generations are moving from workforce to pension, who knows what the remaining employed do with their plans, etc.

[Uben]

45. I can tell you are determined to defy logic....

...so we'll just have to agree to disagree. I think we can agree that the best thing for everyone is getting Obama elected, so let's concentrate our respective energies on that. Good luck to you, and I hope you live long and prosper!

(I should have said "my logic". I certainly do not have a lock on it)


Regards- Uben

[tama]

46. I'm not American

and not for Obama - he's just slightly lesser evil, certainly not best thing for everyone.

Much better would be to get rid of the two party system and the whole elite class. Just like in South America.

[earth mom]

16. I'm sorry for your situation, but why don't people understand that the stock market is risky?

Seems like I've known that all my life.

[hfojvt]

48. It bothered me that my whole 401K was market based

the only options were mutual funds. No t-bills, no government bonds. Even the bond fund was a mutual fund, and IIRC, every single fund had negative performance over the last twelve months or longer. This was in August of 2001 when I started. Over about 6 months, until I was fired, I put about $700 in my 401K and sold it two months after I was fired. It was ridiculous as far as return. I invested something like $705, and got back six months later, something like $700.

What an investment! But the company did not offer any non-market choices. I have kept my IRA in CDs, which is supposedly stupid for such a young man, but it has at least not tanked ever. However, it is being eaten up by inflation. Back in 1990 when I put $2000 in my IRA, it would have bought 4,000 loaves of bread or 1,300 gallons of gasoline. Now that same 2,000 will only buy 2,000 loaves of bread or 625 gallons of gasoline. Much of that inflation has happened in the last two years.

[chupacabranation]

17. It's gonna be okay.

I think it's going to get better soon. Especially if we can get a real deal on the table for the 'bailout' that involves kickbacks for the American people. It will restore confidence and hopefully get some liquidity back into the market (the lack of liquidity, due to the banks 'holding out' for gov't aid or due to a true aversion to lending to other institutions, well...it still has the same effect).

Please don't be frustrated. It WILL get better. Stocks turn down, but they always turn up again.

Have you ever read the book The Black Swan?

I highly recommend it. It will give you some historical perspective on this whole affair.

It's GOING to get better. Remember that. :) People who play by the rules are by nature risk-averse; you're never going to lose THAT much. Conversely, people who take huge risks (ahem, Wall Street) have a LOT more to lose (and lose a sh*t-ton more) when sh*t hits the fan.

There's a great part of one of Donald Trump's books where he's talking about a massive stint of bankruptcy he's experiencing, to the tune of 9 billion dollars. Remember, this is a man that started out as a 'have,' not a 'have-not.' Apparently, he was walking down the street after this 9 billion dollar loss, saw a homeless guy, and thought: "That guy's 9 billion dollars richer than I am."

You're never gonna be in that position. Believe me, when you gamble w/other people's money, you can lose it all...and you don't always gain it back.

It is always darkest before the dawn.

[tama]

21. It's going to get better

but not the way you think - that would make things ever worse.

Humanity needs to learn to live humbly in the limits and not to destroy the carrying capacity that allows us to live on this planet, if humanity tries to protest out of hubris against the limits, tough love from Mother Nature will show us our place.

Good thing is that Mother Nature has also the right to enjoy the songs of men walking this Earth and she loves us just like all other creatures that are part of her.

[RainDog]

18. I'm so sorry for your situation

and I hope that we will come out on the better side of this sooner rather than later.

Life is not fair and there is no justice. I don't know how your investments are structured, but some investment people are better than others. I am fortunate that the little bit of funds I have have only lost 5%.

I don't want to lose more of that for now so a little while back I changed the way things were situated in my acct. until we get beyond the Bush years.

I lived my life supporting the well-being of my family, cared for two kids, one with autism, made career sacrifices so that my children could be with both parents, saved my ex-husband's LIFE four times (because of his bipolar illness) and when I wanted things to change for the better, I ended up with little to nothing for it all. For 17 years of my life, during my most productive earning years.

My ex's lawyer wanted me to agree to not sue for emotional abuse. I didn't sign anything, but I also have not done anything of the sort. He denies I saved his life now because, those times when I made sure he got to the emergency room and got his stomach pumped... he didn't mean it, so it wasn't real. I guess that's why he did this when I and our two children were in the house with him.

I have no insurance now and haven't for the most part for years. my state has now made it possible for all people in the state to have insurance of some sort, which is good since my life situation left me with some severe problems with depression. I hope you can understand that, considering.

I've learned so many good things from going through this bad experience, tho. One of them is the knowledge that, even as hard and painful as my situation has been, I am far better off and far luckier than many, many, many people where I live. I try to help those people as much and as often as I can because it helps me to remember gratitude.

we're all in this together, those of us who understand what it's like to have, through no fault of our own, suffered.

[renate]

23. you've lived a life so much better, in every way, than the lives of icky people

I can see you realize that... but I just wanted to give you props for going through what you did, and especially for dealing with the ingratitude and emotional abuse of the man whose life you saved, and coming out of it with such a positive attitude. :hug:

[RainDog]

27. lol. thanks, but I'm no angel

I have my days when I am so pissed off at the world that I can hardly see straight.

again, that's why I have to reach out to others to develop gratitude. and truth to tell, my ex is not a bad person. he's a person with an illness and illnesses take their toll on entire families. I'm glad he seems to be doing better now. I understand a lot of what he went through after the depression I have dealt with since I've been divorced. again, this doesn't mean I'm universally nice about it all.

I should find an avatar for DU that says... this was a sucky day, watch out! contents may be flammable. : /

[renate]

28. well, there's a difference between being "no angel" and getting angry sometimes

Having days when you're pissed off at the world doesn't mean you aren't wonderful. What could be a more rational response to difficulties than to get pissed off sometimes?

You had a choice to make between becoming bitter and discouraged, or being grateful for lessons learned and the future ahead. You made the harder, but better, choice. I think that's admirable. :hug:

[TooRaLoo]

22. Long term, long term, long term.

In time, things will be back to normal. My ex boss is a financial advisor for one of the most stable and reputable companies. I'm no financial guru, but I heard/saw tons of statistics at that job. Things may or may not get bad for everyone, but as mentioned by others, in time, with Dems in control, things will swing back up. Don't check your balances too much! :toast:

Poor ex boss. I can only imagine the phone calls he's getting right now. Part of the reason I don't work there anymore. People are understandably worried and upset when it comes to their money.

[RagAss]

24. The 401k became the rage under Clinton when they grew.....enough said !

[Smart Guy 4 Freedom]

25. Believe It !

Thats how it always happens, the little guy gets the short end of the stick.

[Winterblues]

26. Just remember to vote Republicans, they really know about economics...

I believe with all my heart that once Obama is our President that a whole new attitude will take over America and consumer confidence will drastically increase. I think you just need to hang in there for a few months until the Republican decay is cast aside..It will get better..

[slackmaster]

30. We, the chronically sub-rich, get fucked on just about every deal

That's what we get for not being poor enough to be on welfare.

[Greyhound]

32. You don't have to understand the porcine digestive process to know that pig shit stinks.

This crisis is exactly the same play that was made in the 20s and the late 18th century. It is a classic scam, you buy the "bad loans" that are made on real assets, you get the taxpayers to cover your "losses" and hand you a big pile of cash on top of it, then you use the big pile 'o cash to buy up the properties/assets again for pennies, a tiny fraction of their worth, and when the dust clears you have quadrupled or quintupled your worth at the expense of everybody else.


DON'T FALL FOR IT. WAKE UP AMERICA!

[girl gone mad]

42. My guess is..

The rapacious banks will take the bailout money and run straight to CBOT to bid up the futures prices on food commodities and bring hunger to the very people who are paying for the bailout.

[Vickers]

33. Thanks for all of the replies. Instead of answering individual posts, I'll

try to answer some of them here:

1. Yes, I know the stock market is risky, but I am not buying individual stocks but rather managed funds that tend to weather the ups and downs of individual stock performance. It's not like I went and put all of my money into, say Enron, and now I'm complaining. I am actually diversified in 14 different funds in two fully-vested 401Ks managed by two different companies.

2. I'm not sure how to check online if I am dipping into my principal, but I'm presuming I haven't. I know, I know, "You haven't really lost ANYTHING, then!" is the argument, but that's a tough thing to keep in mind when you look at the graph of my 401Ks.

3. I am only 44, so if there IS a recovery I am OK, plus I have 20 or so more years of income. I have my investment risks spread out pretty well (I think) for someone my age, and I have plans to reduce that risk as I approach retirement.

I suppose my thing is I feel sort of like a sap for playing the game like I am supposed to, and STILL getting fucked. I hope that even if the shit hits the fan I am ahead of the folks who didn't plan accordingly (although I will be glad to help them if I can). I'm more worried about my kids.

I have something of a survivalist streak in me (don't worry, it's not TOO wide, :P), and I have been studying up on skills and info needed if things go REALLY crazy and we revert back to a more *ahem* pastoral existence. Also, I grew up poor, so I know that it is something that is survivable.

Honestly, if things get that bad I'd miss a steady supply of reading material more than, say, the internet.

P.S. Thanks for the keep-your-chin-up replies, too. :thumbsup:

[sendero]

37. Keep your chin up :)

I think we are in for some hard times but I believe we'll all get through them and I also believe, STRONGLY, that America will become a better place.

We could all use a little more humility, we could all learn to deal with reality rather than an advertising-induced consumer-coma.

People and families will have to help each other, that is good for the helper and the helped.

And the obscene excesses of the corporate world, from ridiculous salaries, to offshoring every job, to engaging in crazy risk and leverage and treating the financial system like a casino - those days are over.

[MilesColtrane]

52. You're doing fine.

Keep your eye on the long term.

Continue putting money in, but gradually rebalance your portfolio each year so that, by retirement age, no more than 20% of your investments are in the stock market.

[TexasObserver]

38. I wouldn't worry too much, if I were you.

You're a fiscally wise person, and you have taken smart steps to plan for the future. The only thing I would want to make sure is that I'm not invested in any company that is at risk for failure.

You have years to go before you retire, so this downturn will pass in time, and you'll rebound in the markets.

The people who get hurt are those who are (1) retired, or (2) nearing retirement, or (3) need to cash out now because they need their 401(k) money to get by. You're in for the long haul, so as long as you stay away from any risky companies, you're probably good.

You should not worry. You have lived a very frugal life, and now is not a time that will likely hurt you. In fact, it will bring stocks down, and if you keep buying, you'll get some deals. Buying the same dollar amount every month is one sound approach to investing.

[unkachuck]

39. sorry about your situation....

....but the fuckin' has already occured....we need to look ahead....

....after crashing the system and stealing our money did you notice how wall street and the credit market boys are placing their faith and future in the hands of our government?....the full faith and credit of the US government protecting wall street and the credit markets?

....but weren't they the ones who wanted us to place our retirement and economic future in THEIR hands?....didn't they take our money without providing us any guarantees?....do you think maybe they wanted the ability to crash their system when it came time for us to collect?....and who was it that was foaming at the mouth trying to privatize our Social Security money?

....we should now forget the 401k's and the wall street investment junk and build Social Security into a program that will provide us and our children with excellent retirement income and benefits, livable income and guaranteed benefits backed by the full faith and credit of the US government....gauranteed!

....if a massive government run socialist program is good enough for wall street and the credit markets, it should be good enough for us too....

[hfojvt]

49. down 24% is not the same thing as being wiped out

In 2003, I sold the building I bought in 1998 for about 1/3 of what I paid for it. I lost about half my life savings there, but I have made up for that in the last five years (maybe that is easier because my life savings was only about $40,000).

[LeftyMom]

50. You have years to go, right? You'll be fine.

Keep investing right now, your money will go a lot farther and when things eventually recover you'll be sitting pretty.

You know better than to be an emotional investor (which is another word for a sucker.)