Don’t check your 401(k) account. It’s falling.
By Anthony Rivieccio, MBA,PFA
We will not dub this past Monday as, “Black Monday” but as a short piece on economic history.
In financial terms, a correction is the reverse of at least 10% in a stock, bond, commodity or index to adjust for an overvaluation. A correction is usually negative.
The 4% correction in stocks that went down on Monday has now; since January 1st of this year, created an economic decline in 10%. The 4% decline on Monday followed a prior 2% drop from Friday. Together the movement downward rhymes went as far back as 1987, almost 30 years ago.
In my world we call this 10% correction, a very bad thing!
If you have some money in bonds or fixed related accounts, then you already know that they are safer because of the protection but you will be lucky if they get more than 3%. If inflation is 4%, are you really making any future money for your retirement?
Are you managing your account yourself?
When you get your next 401k statement it might be ugly at first glance. It also might signal a time where you look yourself in the mirror and ask, “When am I going to retire?”
The answer should guide you to a concept called Asset Allocation.
Based on your age, your time of retirement, and understanding your levels of risk/reward, your 401(k) plan might have to be “re-twitched”.
Why do more people need to implement this concept immediately?
Well, you simply want to keep your money firmly on the road, as you glide through the earthquake riddled street blocks to retirement!
What earthquake you say?
For starters, looking at the global losses of Greece, Puerto Rico, and now China leaves little doubt that our 21st Century United States growth is now dealing with wild “hiccups”. As we see here gas and oil has come down 60%. Great for car drivers but bad for our U.S. economy.
As we go into the fall season, we can expect more from Congress, whether their actions are positive or not. So far, Congress’ divided government has not been able to fully implement the fiscal plans they need to make our economy grow further and with the Presidential election season coming up, citizens should expect more “sideways” government.
As early as September 20th, Janet Yellen, Chairwoman for the Federal Reserve, has suggested a tightening of U.S. interest rates. Unlike prior years, in a sluggish economy this is a very bad situation.
So after writing this piece, I changed my mind.
Look at your statement again and ask yourself these questions:
-Do I need asset allocation?
-Can I do this myself?
-Can someone else do what I do, by themselves?
Only you (and your heart…and your 401k statement) can give the answer.
But a final piece of advice, please do not try to do it yourself. Don’t try to experiment on your own, let an independent financial advisor assist you in making your heart (401k) better.
Anthony Rivieccio is the founder & the CEO of The Financial Advisors Group, celebrating their 18th year as a fee only financial planning firm specializing in solving one’s financial problems. Anthony, a recognized financial expert since 1986, has been featured by many national and local media including: Klipingers Personal Finance, The New York Post, News12 The Bronx, Bloomberg News Radio, Bronxnet Channel 67 TV, The Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News and The Bronx Chronicle.
For financial inquires or assistance, Anthony can be reached at (347) 575-5045 or advisorsgroup@ymail.com.
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