They are 401(k)s and a recent study by the Consumer Federation of America shows that 21 percent of people have abandoned their 401(k)s and are counting on hitting some sort of jackpot; 16 percent are hoping for an inheritance instead of saving. The study showed that 9 percent are looking for someone to sue to provide a retirement nest egg.
Experts say just about everyone is looking for an answer after the beating 401(k)s have taken on Wall Street.
Jessica Dancingheart, 43, is a student and a single mother. She is worried about the wild swings on Wall Street just like everyone else.
"It has, in some ways, changed my investment patterns. It's changed how I shop. It changes how I want to put my money to use," she said. "I'm pretty concerned."
9NEWS talked with four experts about what comes next for investors like Dancingheart and what comes next for 401(k)s.
"401(k)s are really a painful spot for a lot of people right now," Karl Frank, with A&I Financial Services, said.
"We have had the largest amount of net redemptions, or selling of American stock, by individuals ever," Bruce Allen, with Bruce G. Allen Investments, said.
Things don't look to change in the immediate future either.
"My best guess is that we will continue to see volatility," Susan O'Grady, with Equipoise Wealth Management, said.
That makes some of our experts queasy about Wall Street too.
"I think it's probably a good idea not to be all in stocks," Robert Douglas, with the Heartland Institute, said.
You can find predictions on the direction of the market all over the Internet, but our experts say if you find anyone who thinks they can actually forecast any market index, think again.
"I would run the other direction. I mean, nobody knows," Allen said.
Still, the experts say the stock market is a place you should be putting some money with investment strategies that vary depending on age. Most think young investors in their 20s, who have largely abandoned Wall Street, should instead be all in.
"If I were in my 20s, I'd put as much away as I possibly could and learn to live without it. If I could get away with putting 10 percent or more of my money away in a 401(k), I would do it," Frank said.
By the time you reach your 30s, you might want to have a "mixed" portfolio of both stocks and bonds. But given the recent market turmoil, one of our analysts likes the bond market more.
"At this point in time, particularly with the economy in the kind of shape it's in, it makes a good deal of sense to have more assets in bonds that it does in stocks. And actually, over the last 10 years, the bonds have outperformed the stocks," Douglas said.
Forty-year-olds had better get really serious about saving and growing their money, and another of our experts believes that means hitting the gas.
"Owning assets, owning corporations and owning real estate are the ways people are to going get wealthy over the next 20 to 30 years. It's not going to be by owning bonds," Allen said.
All of our experts agree that 50-year-olds and those in retirement still need "some" exposure to the market to avoid running out of money given longer life expectancies.
"You don't want to be out of the market, even if you're 70 or 80. However, you want to be less in the market, or less exposed to market volatility," O'Grady said.
The bottom line is to follow a strategy that matches your "risk tolerance." You need to be able to sleep at night, not worrying about what's happening to your money. But no matter your age, the message is: start investing now. The clock is running.
Source: http://www.9news.com/dontmiss/230003/630/What-to-do-with-your-401k---4-experts-weigh-in-
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