Cash out 401k and buy PM's?

I would personally say no, now is not a good time to cash out of your 401k, especially if your time horizon is 5-10 years or longer. Precious metals have been run up 300% in the last 5-6 years. It kind of reminds me of tech stocks in 1999. By selling your beaten down 401k equities and buying PMs right now, I would say your chances of timing the market right are minimal. You risk selling low and buying high.

I don't know your personal financial situation, but I think it's prudent to keep putting money into the 401k if you've got a long time horizon and your investment vehicles in the 401k are stock mutual funds. You should also consider putting some money into PMs to diversify your portfolio.

 

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if your 401K allows buying of individual stocks ... you can buy GLD or SLV within your 401K

Or if you left your job, you can roll over your 401K into a Rollover IRA ... where you definately can buy these tracking stocks within your retirement acct

Just a thought

 

If you are really worried about losing money in your 401(k) you might want to rebalance your portfolio so it matches your risk tolerance. Your administrator should have some sort of "stable" value fund that invests heavily in TIPS. You will miss out on a lot of potential increase when/if the market heads back up, but you won't have your money eroded by inflation (assuming of course the US government doesn't collapse).

But overall, it sounds like you just had a freak-out, like many Americans, and you did the right thing. You asked for some input, weighed your options and didn't make a knee jerk reaction. The advice on here is pretty solid. Stay the course and continue to diversify and you should be alright in the end!

 

Only problem with TIPS is that the US Government inherently underreports inflation, and this reported number is built into TIPS returns. So in reality even though you are supposed to be immune to inflation with those returns you still gradually lose.

 

don't forget the Cubs will win the 2015 world series...you know I made I bet on that...if I win I get $1 if I lose I owe $0.50..think I need to make sure I got the cash ready to pay in oct 2015...

 

You loose. sweet Lou retired.....

 

You should have gotten at least 100:1 odds on that bet.

 

If you plan to cash out a 401-K plan, then be prepared to pay a lot in taxes and penalties. I think that all of the taxes and penalties that are associated with cashing out a 401-K will take about 40% of the 401-K balance. I could be wrong on the percentage but it is a big percentage of your 401-K.

 

some company 401ks will let you withdraw and move the money to a IRA if you are fully vested. Don't smash yourself with taxes. I fear after labor day we may see another drop in the market. You may look in moving some of your money to your mma option if you have one to see.

 

I really don't know of any of the books here in vegas that will take a "future" that far in advance. But you can get it down before the season starts. Sometimes you can get a good number. Super Bowl futures are available now.

gary

 

Hi Tom - I did exactly that last year. I believe that the government will eventually raid 401k's and IRA's as the last untapped resevoir of taxable wealth. There is already talk about "nationalizing" part of our retirement funds to "protect us" from the stock market. A portion of your assetts would be used to buy treasury notes, and other "safe" government issues. The problem is this: If foreign nations have stopped buying our debt at the treasury auctions - why would we want to hold it? It is note a decision to be made lightly - but one that should be considered.

 

Contact the 401K manager. I don't know how yours works, but I can diversify mine and have done so a few time this year to avoid a double dip, as nobody really knows if we will have one or not. I have bonds, TIPS, real estate, stocks (equities), commodities fund, and money market. All of these vehicles have their own risks and rewards. I've moved a lot of money out of equities and have moved it to the money market. In the money market, I'm not making any money with interest rates as low as they are. But, if stocks drop in a second dip, I can take all that money I withdrew from the market and buy back the stocks at possibly 60% of their max value, and ride the new bull market upwave after the crash. Of course, I'm not making any money in the money market and if stocks climb instead of fall, I lose out. But as someone else said, when dealing with your pension the key word is "safe."

P.S. I heard that argument about TIPS. And I agree that the gov report of inflation is always under reported, but atleast TIPs have inflation protection. If you had your money in bonds or real estate and we hit a period of high inflation, which vehicle do you think would protect you more. After all, you have to put your money somewhere.

 

You could stop putting any new money in and then buy PM's with the money you would be contributing.

 

First, yes you can transfer from a 401k to an IRA under circumstances defined in the 401k. Most of the time you have to be over 65 if you are still working there to transfer. Ask your administrator, s'he is the only one who will know. Second, yes Silver you need to put your money somewhere, but many people are looking for inflation protection, so TIPS give a lower yield than a normal bond right now. Therefor you are paying for that protection. It is still good thing to consider, I was pointing out the protection isn't quite what someone may expect. I still think they have a place in many people's portfolios. Your's was a good point, though, thank you.