I don't have the stomach for this....

[Smilinggirl]

My retirement funds are pretty modest compared to most people here, but I had been pleased with watching things grow steadily over time. When things started to go bad, I stayed the course. I continue to max out my 401k. My IRA is fully funded for the year. I did, thank goodness, pull out my taxable investments since I'm not willing to lose that.

I looked at my Vanguard accounts this morning and I've basically lost all my profits at this point. I could have just parked that money in a savings account making pretty much nothing all this time, and I'd be in the same situation. I figure the next thing I'll see is me losing the money I've saved over the years. I can't take this any longer, and I'm wondering if I should make some changes. I currently have money in target accounts for 2030 and 2035. I have always been a pretty conservative investor, but maybe I should move things into something even lower risk? I'm not even sure what that would be, maybe a 2025 target fund?. At this point, I'd rather just make zero, but lose zero. A year ago, I was thinking about leaving work, but now I feel like I'll be stuck working forever. I know everyone says hang on, but geez, hang on and watch it all go away?

I don't really know anyone in real life who I can talk with about this, so I'm asking for some guidance or input. I'm a fairly intelligent person, but for some reason and despite much effort, I cannot seem to grasp the concept of investing the way most of you do. I don't like feeling incompetent about something so important, but I do. I don't know what to do at this point. Is there an ultra conservative, safe fund I can move things to in order to simply stop losing money at this point? Can someone explain it to me in a really basic way because I'm at my wits end.

As always, thank you. I appreciate your input.

[rennigade]

Hindsight is 20/20. All of us are in the same boat. You have to look at the big picture. Ive been investing for 15ish years. Over that span I am waaaay up. This year, we are down for the year but still up overall.

I guess it depends when you want to retire. If its not for 10+ years, stay the course. If you need the money sooner, you probably shouldnt have been invested so aggressively.

Also, because of inflation, money that makes nothing is losing money...meaning you have less buying power.

If this is really affecting you that bad you may want to move the money into something much more conservative. Yes, you will lock in the loss, but mental health is more important than $$. It seems like its affecting you pretty bad, which isnt good.

[tommybitt]

Smilinggirl,
I certainly understand your fears surrounding the current market conditions. Although I am personally 5-10 years away from retirement, I am still unnerved when I see how much my investments suffer during a cyclical downturn in the markets. Unfortunately, I will have to go along with the crowd and say "hang on".
It is difficult to recommend an alternative strategy with so little information. I'm a little confused about your Target funds being 2030 & 2035, Yet you mentioned in your post that you were thinking about "leaving work a year ago". Does that mean full retirement?
Take a close look at those Target funds to see how they are balanced. Meaning what percentage is stocks, what percentage is bonds. Common advice amongst financial advisors is to properly balance your percentages. Google "How to diversify nearing retirement" for many articles regarding this. If you ARE 1-2 years away from retiring, perhaps a "sooner" target fund (2025) would be more appropriate as it would more likely be heavier weighted in bond funds which, theoretically, could offer some more protection of your capital.

I am personally 5-10 years from retirement, and only have 15% in bond funds. Many might say I should have more exposure to bonds only being 10 years away from drawing on my funds. But I've weathered volatility in the markets before, while feeling the same fears as you, but I stayed the course. And when the market cycle finally changed (improved), I watched my 40% LOSSES rebound exponentially. (My 401K went from roughly $81K down to $45K. But within 4-5 yrs recovered to $132K)
I read once, that you're only truly "losing" your money if you are cashing it in (taking distributions) while the market is in a downturn. "its a paper loss, not a real loss" is another phrase I've heard a lot. So I've trusted in this before and it seems to prove true. The only caveat to moving heavier into bonds at this point, would be missing the potential gains when the market swings upward again.

My only actual advice is to research as much as you can on your own, to try and gain some peace of mind during this period of volatility. The only alternative would be to consult with a financial advisor (specifically one who does not sell investments), but of course that would incur some costs.

Regards,
Tom

[disneysteve]

This is a very normal question and a very normal way to be feeling. Many people think they have a higher risk tolerance than they do until the market takes a downturn and they can't sleep at night. Ultimately, you need to choose an asset allocation that truly matches your tolerance for risk.

How old are you? When do you plan to retire? Married? Children? Debt?

Keep in mind that even after retirement, your money needs to last 20-30 years or even more if you're fortunate to have a long life. Shifting too conservative can result in you outliving your money because inflation eats away at the value of your portfolio, especially in times like right now when inflation is quite high. It looks great on paper to say that you could be earning 4% guaranteed by just dumping all of your money into Treasury bills but inflation is currently over 8% so you'd actually be losing 4%/year in buying power. You need a good chunk of money in stocks for long term growth. The question is how big should that chunk be.

The 2030 fund at Vanguard is about 65% stock, 35% bond which is a nice moderately conservative allocation for a retiree. I'm aiming for 60/40 myself. You could choose to lower your stock allocation by directing new money into fixed income like buying Treasury bills in your IRA. Be careful with bond funds as those can and do drop in value. Vanguard Total Bond Market Index Fund is down about 13% YTD. One-year T-bills are just over 4% now and will probably tick up a bit more with the Fed's rate increase today.

One really good thing to do is to run the numbers. Use an online retirement calculator like the one at firecalc.org. Play with the settings and the assumptions and the allocations to see where you might end up with a 65/35 portfolio vs a 50/50 or 40/60.

Another good idea, quite seriously, is to stop looking. I don't mean to totally ignore things but maybe plan to check on your holdings quarterly. Don't look every day or week or even month. Then the daily gyrations won't seem as dramatic.

[Petunia 100]

May I just say that I agree, it is no fun at all watching your portfolio shrink. I am 55 and I would like to retire sooner rather than later. My nest egg is very modest. Watching 100k disappear absolutely is alarming.

I also do not understand the purpose of multiple target funds. If they are from the same company, then they are the same fund albeit at different points on their glide path. Look at the asset allocation glide path and choose the fund which makes the most sense for you.

I think you should explore your feelings of incompetence. Why do you feel this way? You're doing a lot of things right, and they are the most important things. You're contributing regularly, you've chosen quality investment vehicles, etc.

[myrdale]

The market is going to go up and down. However, year over year, history has showed its went up. Keep steadily investing and don't try to play the market. As long as you don't withdraw your money, you haven't lost anything. Just stick with it.

[Jluke]

Don’t look. Seriously

one day last week I lost 48,000 across all accounts.

you are invested wisely with those target funds.

the biggest enemy to your plan is yourself.

“bears ride the elevator

bulls take the stairs. “

[rennigade]

And feds increased rates by .75%. Here we go ..

[MonkeyMama]

Some thoughts:
1 - Having an appropriate allocation is important.
I've been bracing myself because early on in my investing career we had more gyrations in the market but I also had nothing to lose. Now we have amassed a lot during last very long bull market run. So far it's been... *shrugs* We are 70/30 or 60/40 stock/bonds (don't remember off the top of my head). Maybe down 10%? Meh. (Clearly we have an appropriate allocation for our risk tolerance.)
Of course, keeping short term money is also important in this equation. We are also flush with cash and liquid assets, for more short term needs. (Some of that is just luck, because we are paying cash for college and went a little extra liquid after 2020 uncertainty. To be clear, we waited for things to rebound and then re-evaluated our risk tolerance for shorter term funds. I am glad most of that is in cash right now. With the bonus of mega interest I Bonds. Er, most of it is in I Bonds now. But we also didn't panic and sell low).

2 - Agree with the "don't look" comments.
No need to watch the pot boil. We evaluate our investments at the end of every year.

3 - I personally love the rare opportunity to buy stocks on discount. After the last ~14 years where it was just up, up, up. I think it helps to look at it that way. I will never understand why people many years away from retirement are worried about it. Wish I had gotten more down years to buy stocks at a discount, during prime earning years.

[Smilinggirl]

Thank you everyone for the responses. A year ago I was starting to feel comfortable with the idea of early retirement (not that I was ready, but I could see the possibility moving closer). I have enough in cash reserves, passive income etc. that I won't need to tap into my retirement for 10-12 years, although inflation has me rethinking that as well. I'd probably pick up a low stress part time job that would bring in a few hundred a month just to provide a little wiggle room. That's why my target funds are 2030/35, but now the money I'd planned to use for age 70ish onward is shrinking. I had a rather serious health issue 5 years ago. It seems to be fully behind me, but because of that, I'm always trying to balance having enough money to live to an old age with retiring young enough to play and focus on taking care of my physical and mental health while I still can.

I'm single, all my kids are grown and I have several grandchildren that I'd love to spend more time with. I have no debt. I live a fairly modest lifestyle, although I have started traveling again this year, but that's an extra, not a necessity. If/when I do actually stop working, I'd probably cut back on that, although I wouldn't give it up completely unless I had no choice.

[disneysteve]

Do you mind saying how old you are?

[Smilinggirl]

Do you mind saying how old you are?

Not at all, I'm 58.

[disneysteve]

I won't need to tap into my retirement for 10-12 years+

So you're 58 and are looking at the current performance of money that you won't be touching for 10-12 years when you're 70+.

My advice? CHILL! Seriously, with a 10+ year timeline, you should be thrilled that the market is taking a downturn giving you the opportunity to keep investing at lower prices. That's how the big money is made. Buy low, sell high. You want to be picking up shares when the prices drop and riding the recovery which has always come after a bear market, every single time. The market has always recovered and there's absolutely no reason to think that this time will be any different. The recovery could be slower or faster or about the same as average, but it will recover and grow again. If you keep funding your IRA and 401k for as long as you're able to, you'll have even more shares in your accounts to benefit from that eventual recovery.

And if, after contemplating all of that, you're still uncomfortable, then go ahead and dial back your risk level. If you're at 65/35 now, rebalance to 60/40 or 55/45 or whatever lets you sleep soundly at night.

[LivingAlmostLarge]

What is your money looking like? Maybe it's time to pull the trigger. I mean a lot of people are upset over losing money (I'm looking at my aunts) but do they have enough? Yes. The bottom line is that you can and should be tapping principal when you retire. The point isn't to only live off off 4% and never tap principal. But look at the numbers straight up if maybe it's worth just retiring.

If you wanted us to give some advice maybe post the numbers and we can tell you if we think it's cutting it too close. Chances are i'll say retire

[bjl584]

No need to worry if you are a decade or more from retirement. Just stay the course