Comments on: Which is Throwing Good Money After Bad?

By: old and poor

old and poor — Sun, 19 Oct 2008 06:36:51 +0000

If you are old and poor, why wouldn’t you try to get rich quick?

It’s not as if you have time to get rich slowly.

By: Festive Link Love Carnivality #28 | Free From Broke

Festive Link Love Carnivality #28 | Free From Broke — Sun, 12 Oct 2008 13:16:24 +0000

[...] Are you throwing good money after bad? You sure? See what Mrs Micah says. [...]

By: The Frugalista Files

The Frugalista Files — Fri, 10 Oct 2008 18:06:16 +0000

I agree with writer’s coin. It’s when you want to sell that you run into a major problem. I’m no fan of this economy, but I am learning how to ride the storm.

By: Weekly Roundup and Carnivals | LivingAlmostLarge

Weekly Roundup and Carnivals | LivingAlmostLarge — Fri, 10 Oct 2008 14:44:19 +0000

[...] Micah talks about throwing good money after bad, for me it’s about our [...]

By: Writer's Coin

Writer's Coin — Fri, 10 Oct 2008 11:19:31 +0000

Thanks for the link! I agree with most of what everyone else is saying here, but it’s amazing how much fear this is all creating. At least people are finally paying attention to their investments and the stock market in general. You don’t lose any money until you sell…

By: Funny about Money

Funny about Money — Fri, 10 Oct 2008 04:07:21 +0000

As a practical matter, even if we’re close to retirement — as I was until the past week or two — it’s WAY too late to pull out of the market now. The time to sell came and went along about last February.

If you sell now, you lock in losses, even if you are old and gray. Especially if you’re old and gray.

The likelihood that the market will regain my funds’ recent losses during my lifetime is nil. It will take 15 to 20 years for my assets to recover, just as it did the last time a steep drop occurred. If you have that much time left in your working life, you’ll be just fine. Keep on buying: now’s the time.

But if you take your money out and stick it into some 3% bank account, you never will recover the losses you’ve sustained in the past couple of weeks.

I’m going to take out enough cash to pay off the small loan against my house–about 10 grand–and let the rest sit. And retirement is now out: I will be working until I die in the traces. Assuming I can get work at all.

By: Dad

Dad — Fri, 10 Oct 2008 01:18:19 +0000

As usual, some excellent advice. However, the story isn’t so simple for those who are approaching retirement or are already there. We don’t have the 5-15 years it may take to recover in the market or mutual funds. For those people, I seriously recommend consulting a financial expert. Be very careful also of those brokers working for large brokerage houses who want to sell you the stock de jour. I’ve learned that they are required to push this stock on their clients even if it doesn’t pass muster as a timely investment. In my own case, I’ve had to stop the hemorrhaging. But I think for younger people, especially in their retirement accounts, will do best if they hang on to sound investments and wait for them to recover. This is certainly a place for something like the index funds where the exposure in the fund is broad and not focused on some specialty. The financial companies are a bad area right now and some of them are failing making their common stock worthless and that diminishes any fund invested in them. We saw today that GM and maybe Ford may be badly hit. I wouldn’t want a fund that specializes in US car making. Diversification is needed and the index funds look like they may meet the bill.

By: Fabulously Broke

Fabulously Broke — Thu, 09 Oct 2008 21:43:37 +0000

Great post. Am linking this!

By: Jeremy

Jeremy — Thu, 09 Oct 2008 16:38:09 +0000

Good post. You know, sometimes I wish the pundits like Cramer and Suze Orman would just STFU sometimes.

You wouldn’t believe the phone calls I’ve received the in past few weeks. People calling in and freaking out because they overheard someone say Cramer said to sell all their stocks, and people wanting to liquidate their 401k because Suze Orman was on Oprah and said to pull your money out of anything that isn’t FDIC insured.

People don’t listen to the whole story, and all they hear is a sound bite or overhear someone at the water cooler and before you know it they are freaking out for no reason. And it makes my job that much harder.