1064

Bailing At the Wrong Time

Dear Dave,

My wife and I are both 58, and she has $250,000 in a 401(k) that has lost 20 percent in the last couple of months. This represents the vast majority of our savings. We probably won’t need the money for at least another five years. Should we move it to something else?

John

Dear John,

It’s normal to be a little bit scared when the markets are as crazy as they’ve been lately. The fact that the news media has been going bananas with all this doesn’t help matters, either.

Here’s the deal. Ninety-seven percent of the five-year periods in the stock market’s history have made money. So far, 100 percent of the 15-year periods have made money. That’s a pretty solid history. You’ve got time for the markets to recover.

Chances are, you won’t be using this money for another 10 years or so. Even if you retire early, you’ll probably just pull an income off of it instead of cashing it all out and hiding it in your basement, right?

Think about this, too. Since 1978, the market has dipped 10 percent or more about a dozen times. It has recovered within two years 90 percent of the time. If you got out now, John, you’d be leaving at exactly the wrong time!

 —Dave

* For more financial help, please visit daveramsey.com.
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