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Tuesday, February 19, 2008

Stock market pain. . . .

Awhile ago, I wrote about my 403b account, and my daily obsession with its value. Once the stock market started wobbling, I vowed to check it once a week---no more. Watching the value drop even as I continue to contribute 10% of my gross each month was simply too depressing.

I'm proud to say that I lasted longer than a week! It's actually been TWO weeks since I last checked my balance online, and as I suspected, the results were dismal. It's clear that in spite of my own contributions, the value has dropped precipitously, and probably won't be increasing any time soon.

So, should I stop my contributions? Put the money elsewhere? I think not. My opinion (possibly unfounded and based on instinct, granted) is to continue my contributions to take advantage of the lower stock costs now. Hopefully this will pay off later when (not IF) the market rebounds. This could take some time, of course. But then, I'm not going to be retiring for another twenty years anyway---and anything could happen during that time.

2 comments:

FrugalMomLA said...

I too have taken the probably unwise decision of looking at my investment and retirement accounts as infrequently as possible. However, I plan to call my financial advisor in the next day or two to see what can be done to salvage the situation!

Christa, frugalmomla.blogspot.com

Angelo said...

Hi,

I am currently in debt reduction phase. However, if I were contributing to an investment account I would do as you are and keep investing. The reason is simple, you are buying low (which is what you want to do) and you are buying more shares with the same contribution (10% of your gross). This will give you a great advantage when the price of your shares increase.

I believe what you are doing is called dollar cost averaging. The cool part is it actually reduces your risk compared to if you invest the same 10% of your gross but in one annual lump sum.

I will be doing the same as you when I am debt free and get to my savings phase.

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