a man, a plan, a canal, oogu.
Here's the sucky part on top of the already sucky part:A 26% loss requires a 35% gain to recover. See if the markets suddenly turn around tomorrow you'd have to grow your 401k by 35% just to get back to where you are today. And as the markets fall further the recover percentage gets worse and worse.If it goes to 50% down you need a 100% rate of return to break even.In the meantime the Italian prime minister has called for shutting down the global markets until a solution can be found - likening it to shutting down a computer that's misbehaving and rebooting later.Oh... and Iceland is about to declare bankruptcy.
Just to show another point of view.. let's remember that 401(k) accounts are funded with pre-tax dollars. If you hadn't put that money in your 401(k), you would've been out at least 26% anyway, in your paycheck. Not only do you get to earn based on "whole" (untaxed) dollars in your 401(k) account, but you're also reducing your overall taxable income for the year. And in many cases, folks get EXTRA whole dollars from their employers as an incentive to contribute to these accounts. So, for many people, some of that 26% fall was padded by their employer.With a 401(k), you may see a short-term drop, but over time, you should see an increase. After many, many years, you'll withdraw those funds and, the theory goes, you'll pay taxes at a lower rate than you pay today. That's the idea. And since you'll just lose more money (income taxes) if you *withdraw* that money today, I think it's best not to get too worked up about it.Just think how cheap the price tag was for those shares that your 401(k) dollars purchased during that major slump we just had. That should be somewhat comforting.
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