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When your retirement account statement comes in the mail, what do you do with it?
A. Rip it open with unbridled optimism
B. Open it very slowly with one eye half-open
C. Toss it unopened into a boiling pot of acid
D. File it away as a memento to share with your grandchildren who ask about the Great Recession.
For a while, I stopped opening mine, but now that the Dow is back above 10,000, I can’t help but want to take a peek.
One of our editors told me her friends have started asking about their 401 (k)s again. For a while, no one dared talk about it. Now, they say: “Hey, you work at Marketplace. What should I do? WHAT SHOULD I DO???”
By “do,” I assume they mean, “Am I about to be royally screwed again?”
The fear is real and understandable. Here’s a Wall Street Journal assessment of the stock market’s rally:
Yet many investors are uneasy. For these people, the market is taking on a “greater fool” feel, meaning that many don’t really believe in the investments they are making. They are banking on being able to sell to a “greater fool” later…
“There still is a lot of trepidation that this thing could reverse itself fairly quickly,” Mr. Yardeni says, adding that he shares the concerns. So why are they taking the risk? “They can’t afford to miss the bull market.”
Now, if you’re in it for the long haul, there may not be as much to worry about (although I believe I’ve heard that one too many times). Still, many retirement accounts have rebounded fairly quickly. From another Journal story:
“If you were Rip Van Winkle and had fallen asleep for a year, you wouldn’t have known we had a crisis–and you would have saved a lot of sleepless nights,” says Alexandra Armstrong, a Washington, D.C., financial planner.
Stephen Utkus, a principal with the Vanguard Center for Retirement Research, took a look at Vanguard’s 3.5 million 401(k) and other retirement-savings accounts and found that 60% of those who had accounts on Sept. 30, 2007, showed balances that were flat or up this year compared with two years ago.
To be sure, the results are quite uneven–and they don’t mean that investors have recovered all of their principal. Many people are still showing substantial losses, especially if they were heavily invested in stocks or have stopped adding to their accounts, or both.
Tonight on Marketplace, we’ll explore the emotions of Dow 10,000. In the meantime, are you back in the market? How are you coping?
Or rather, what I meant to ask is: WHAT SHOULD I DO???