Unless the company you invested in goes into administration, or the company managing a bond related directly to your mortgage starts to look shaky. Or if you had to exercise an Option or lose the money. Or the company you work for gets a hostile takeover and you're made redundant.
Grimstonefire
Mortgage is a non-issue for me, I have a low interest rate, always pay on time and did not buy a house I could not afford.
If the company i work for gets taken over and I'm redundant I cant solve that, but I get your meaning. right now I'm glad i have a second job should I need it to become something more.
Out of the people who populate this board (generally the older folks) I'm probably one of the ones that has taken the bigger(biggish) hits. I don't even want yo look at my 401k again right now it has been that bad.
So unless you are retiring soon this is a non issue. For a good chunk of this forum, I'm guessing there isn't to much money tied up in the Stock Market by the various forum members here, cod be wrong, but doubt it.
This isn't to sound pompous, just perspective. So when this abates and teh market starts to rise (it always does) likewise many people here aren't going to see a benefit either, in the sense of making money.
Auretiious taak… if you look at the bottom of the name, by the email, pm and find tabs… you will see a flag. Kera’s flag say US Virgin Islands… (now, I can only assume she picked the flag of her mother country.)
You just have to ride it out. Unless you work in the financial sector, jobs are still there for the most part, you still have somewhere to live, you're not dying from disease. My pension took a dive, but it should pick up in time for me to retire in 30-odd years.
cornixt
At least you still get a pension, our company borrowed 3billion from ours then abolished our pension plan. So, no retirement here....
Unless the company you invested in goes into administration, or the company managing a bond related directly to your mortgage starts to look shaky. Or if you had to exercise an Option or lose the money. Or the company you work for gets a hostile takeover and you're made redundant.
Grimstonefire
If the company i work for gets taken over and I'm redundant I cant solve that, but I get your meaning. right now I'm glad i have a second job should I need it to become something more.
Willmark
A very real prospect here, since we were just devalued, but I can't imagine many companies wanting to buy us out. Unfortunately all I can see is the company floundering. Here is the kicker that a lot of people don't realize about 401. Half that money is company assets. If the company goes under, they will sieze those assets to pay the company's debt. I saw it happen to those I worked with in Contel. I was the lucky one that was absorbed in to GTE and left GTE before they too floundered. Many of my friends lost thousands, and up to hundreds of thousands of dollars saved towards retirement. It is an all too real possibility. Though I'm not going to panic since there isn't much I can do about it, it does paint a very bleak picture.
Out of the people who populate this board (generally the older folks) I'm probably one of the ones that has taken the bigger(biggish) hits. I don't even want yo look at my 401k again right now it has been that bad.
Willmark
Don't feel alone. But at least I was smart enough to keep 60% of my assets in fixed income, and pull out of stocks early enough not to lose everything. Although, I do have a crap ton of stock options I will never be able to exercise... lol
So unless you are retiring soon this is a non issue. For a good chunk of this forum, I'm guessing there isn't to much money tied up in the Stock Market by the various forum members here, cod be wrong, but doubt it.
Willmark
I had my hopes on retiring in the not-too distant future, but well, like everything in life these days, I've had to put those plans on hold.
This isn't to sound pompous, just perspective. So when this abates and teh market starts to rise (it always does) likewise many people here aren't going to see a benefit either, in the sense of making money.
Willmark
Indeed, I only hope I'm in a position to enjoy it, heh.
My 401k, and Ira accounts are probably down so much that it would really piss me off to look. In fact I don’t look. Because the money is being put to work, and even if I have lost some of the “value”, to be honest the amount in there is still more than I invested over the years (especially with a generous company match which is basically “free money”!). I have been pretty active on my accounts, making sure that my investments matched certain goals (which most 401k let you do by shifting percentages in different funds/money markets, etc.). But based on the current market levels (globally), I’d not be surprised if I had “lost” enough to buy a nice car. It has happened before (on a minor level for sure), and it will probably happen again. But in the long term, this should cycle out (after all, no matter what congress, governments, or even businesses do, there is a cycle to business) and I should recover most of those “paper losses”. I should hopefully have plenty to retire on in the years to come - I know, I’m old but it is still 30 years until I hit retirement age (ok 28, but still _)
Second, this decade has progressed eerily similar to the 70s as far as the global economy. Just as it was eerily similar to the 30s. (ok, we are in no way in a great depression right now. and while nothing the government does right now will change it tomorrow, mistakes could tip us into a very big and long recession). But the progression is still similar. (in the 30s oil was not as big of a driving factor (because we got most of ours from Texas, etc) Gee, look, a 40 year cycle…no surprises there. There is even a great book about economies and recession cycles that discussed this (sorry can’t remember the title jsut this sec, but there was also a book about the great depression of 2000s.) Funnily enough if I remember right, in the 1890s you also had the silver problems and other issues - though growth was driven by expansion of the us then I believe, so may not have been a recession - and the basic economy was in bad shape.
One thing that seems to me tends towards the problem…flat incomes. In the US (sorry, I don’t know the other countries #s- would be interesting to find out) 50% of us make $32,000 or less. And while the top 1% of wage earners get a lot of flack (and aren’t “worth” what they get paid) they do pay 39.6% of all the taxes in this country right now. That is higher than it has been in 40 years…hmmmm. Now I think the rich have enough, and I’d love to see a flat tax policy for everyone (basic and simple with few, if any, deductions.) But the problem is that the bottom 50% of us now pay 2.9% of all taxes paid. (though I’m sure it sure feels like a lot to them!) The problem is that in the last decade, income growth for the bottom 60-70% has been glacial, if any at all (in fact currently it was stated that 68% of all Amercians raises did not even match inflation over the last 2 years). Anytime that happens (last time was 68-77), we get a recession (or readjustment).
This is BAD…all capitals. It could be even Horrible. But it while it may be painful in the short term, unless a true PANIC sets in, the cycle should correct itself and we should be able to move forward (for the entire globe). One thing that will help is if salaries can become “unstuck” again, especially for those at the low end. New technologies and spending will also help spur a recovery. Similar to computers/digital/modern electronics in the 80s, and heavy “modern” machining and electronics in the 40s.
The one thing that irks me is that people will forget that the president does not do as much as congress to hurt us, and whoever gets in will get any credit/blame for the economy recovering or going further into recession. Also remember that our global economy is all based on faith…from the “value” of our currencies, to our “value” of properties. When the faith slips, then trouble is there. That is why a true PANIC is so bad. And, though always linked in history books, the crash of 29 did not cause the depression. A lot of the government responses to the crash did. It exposed a lot of fundamental problems with our system as it was then, and then the faith went and the breadlines started.
Sorry, did not mean to make it that long. And I don’t want to sound preachy, just my 2 cents.
I hate to say it, but I doubt salaries will become unstuck until global economic stablization occurs. What I mean by that is that as long as there are ‘lower cost’ labor centers, salaries will not rise because companies will move their labor base to those lower cost zones until those zones become inflated. this is all driven by ‘profit margin’ and stock investitures. Investors in stock want the greatest returns for their investments, who can blame them there? In turn, the Board of Directors has to answer to those demands by greater profit margins to keep increasing their valuation. This leads them to find more cost savings, and unfortunately a lot of it leads to ‘outsourcing’.
the bottom line is always the consumer who wants more for their money, and this is true of everyone, however, step back and consider, what is better more quantity or quality? In the past we were a nation driven by quality. The dynamic has changed to quantity.
moral of the story? You get what you pay for. But in a global sense it is good for struggling countries in that it raises their economic means, but it really hurts the countries that have enjoyed economic abundance in comparisson. Though I don’t doubt these times will pass, but in reality, they probably won’t until the global economy is equally poor or middle class.
Hashutschosen
A very real prospect here, since we were just devalued, but I can't imagine many companies wanting to buy us out. Unfortunately all I can see is the company floundering. Here is the kicker that a lot of people don't realize about 401. Half that money is company assets. If the company goes under, they will sieze those assets to pay the company's debt. I saw it happen to those I worked with in Contel. I was the lucky one that was absorbed in to GTE and left GTE before they too floundered. Many of my friends lost thousands, and up to hundreds of thousands of dollars saved towards retirement. It is an all too real possibility. Though I'm not going to panic since there isn't much I can do about it, it does paint a very bleak picture.
Ok, first, as far as I know that on the whole that should be incorrect (at least according to my financial advisor, and your friends probably did lose lots of money- I don't know the circumstances of their situations.) Your contributions are entirely yours. The company matching contributions are theirs until you vest, when they become yours. They can't "take them back" when that happens. So several of your friends would have lost their unvested part, maybe, but since most of the companies I have been with only match .50 cents on the dollar (or $1 for $1 for 10% then .50 for 5% more is the best I have ever been offered) then not 50% of your 401k would be "company assets". Especially since 5 - 8 years will have you vested in almost any program of this type.
One caveat to this that my FA made was if you had lots of company stock in your 401k plan. Something that companies try to support but FAs tell you to never do (at least mine- using phrase like limit exposure, eggs in one basket, etc.). Because when the stock price collapses, which it will as the company goes under, lots of your value is immediately bled away by the stock failing. That happened to lots of people at Enron and it was mainly all of the company stock (which they believed in) that REALLY hurt them.
And Hashutschosen, as I said, I'm sure they lots boat loads of money, but remember that the company match is only "theirs" to be had until you vest, at which time it becomes yours........Just trying not to make too many people scared. 401ks are still one of the best long-term investment that workers make, and one thing true, we are not saving enough globally, nor here in America (where we are pretty poor at that)
EDIT: Agreed with your last post. Global economies have help "stick" the salaries, and we are one of those on the top that will be readjusted to a more "even" keel. We won't like it, and it will be slow and unsettling, but we have to avoid the panic mode that we might be about to fall into.
as of 2 years ago, my 401k is 100% vested… so I am ok with company matched funds, they are mine… the nice thing about the market dropping is that with stocks being lower, every dollar I have can buy more… it will just take more time for it to go up…
a 401k is something used for long term retirement plans, if you want it sooner, there are other, better ways to invest.
and while 401k dropping down like flies are sacry and make you feel wierd, long-term they still tend to be much better! Of course short-term their are tons of ways to invest better. Though for best advice, I’d always go to a Financial Advisor you can trust.
One thing that seems to me tends towards the problem.....flat incomes. In the US (sorry, I don't know the other countries #s- would be interesting to find out) 50% of us make $32,000 or less. And while the top 1% of wage earners get a lot of flack (and aren't "worth" what they get paid) they do pay 39.6% of all the taxes in this country right now.
Viskar Zhragoth
That makes sense though. People seem to think that the top 1% should pay 1% of the taxes, but mathematically that makes no sense at all (unless everyone earns exactly the same). Even if there was a nice sliding scale of income and eveyone paid the exact same tax rate, the top 1% will still pay around 25% of the total tax simply due to basic maths. It is a common misunderstanding that seems pretty prevalent on conservative websites trying to reduce taxes on the rich.
(dips toe into politics...this could be scary)
So many interesting replies, I want to discuss them all!:cheers
That video was really insightful, yes seriously!
As to who to blame? Well, them thar americans! That is unfortunately true. Take your pick, you’re all partly to blame (well, except those of you who reads this, I’m obviously talking about them other americans, not on this forum).
I don’t quite understand the whole mortgage thing in the US (well I technically do).
I don’t think many European banks would lend out money with an eye towards that the value gained would pay for the loan (as suggested in the video). And the whole “taking out a second mortgage” (which I see mentioned now and then in american tv-series) would probably be unheard of here. Sounds really dangerous to me. And I guess I’d be correct in that. There’s a similar problem inherent in buying stocks and expecting them to go up in price. You should buy stocks because you expect the dividends to pay you back. All other paths lead to speculation which will lead to bubbles like this (well partly like this, more like the IT “crash”).
As for Iceland, well, they got cocky basically. The last 10 years of growth and cheap money got the banks on a spending spree around Europe. The Scandinavian banks did something similar in the late 80’s and payed for it (well the taxpayers anyway). Turns out they were buying (stocks mainly) on the top of the cycle.
As for 401ks, that’s… interesting. In most(?) of Europe the government more or less administer pensions. There’s no way either you or the company (both parties pay towards a national pension fund) could get their hands on your retirement fund. Of course at least in scandinavia the move is towards more and more stocks as investments because the the system isn’t adequately funded (too many retiring vs paying into the system). Not saying the system is perfect, but at least there’s no chance you’ll be left without a pension when eligible for retirement.
And despite what the media tries to tell us this isn’t even close to a “real” depression. It is mainly concentrated to financing, which unfortunately impacts everything else. Most companies are doing ok, and most people aren’t loosing their jobs.
The fundamental problem is really that banks are afraid to lend each other money, which of course doesn’t exactly lend confidence to those who have their money in the banks. Its ironic that the dumbest thing one can do is to panic and try to take out all of one’s money, because that guarantees a complete system failure (well, barring that the government has to step in to stop it). Of course you need to trust that everybody else won’t panic… Besides if it really gets that bad, those pieces of paper you just hid under the mattress will be completely useless as a new currency is created, which has happened to several countries in the past.
This isn't to sound pompous, just perspective. So when this abates and teh market starts to rise (it always does) likewise many people here aren't going to see a benefit either, in the sense of making money.
Willmark
Oh, I expect to. I had some loose money which I put into various companies which are all solid companies that are mainly hit by panic selling and to some degree the economic downturn.
:hat off:cheers:hat off
Ok, first, as far as I know that on the whole that should be incorrect (at least according to my financial advisor, and your friends probably did lose lots of money- I don't know the circumstances of their situations.) Your contributions are entirely yours. The company matching contributions are theirs until you vest, when they become yours. They can't "take them back" when that happens. So several of your friends would have lost their unvested part, maybe, but since most of the companies I have been with only match .50 cents on the dollar (or $1 for $1 for 10% then .50 for 5% more is the best I have ever been offered) then not 50% of your 401k would be "company assets". Especially since 5 - 8 years will have you vested in almost any program of this type.
Viskar Zhragoth
That is true to an extent, but before the newer laws where 401 interest was mandated to be separately owned, Contel managed their own 401K (edit: Not sure how this played out, my memory is a bit sketchy, but I do remember there was a huge scandle about it at the time, because the holding company ended up being controlled or a subsidiary of some kind), which was why many of them lost so much. Also I believe there have been laws where that money is now guaranteed mostly because of what happened to those people. It still happened though and is a frightening prospect that if that finanacial institution fails what then?
One caveat to this that my FA made was if you had lots of company stock in your 401k plan. Something that companies try to support but FAs tell you to never do (at least mine- using phrase like limit exposure, eggs in one basket, etc.). Because when the stock price collapses, which it will as the company goes under, lots of your value is immediately bled away by the stock failing. That happened to lots of people at Enron and it was mainly all of the company stock (which they believed in) that REALLY hurt them.
Viskar Zhragoth
That is unfortunately what our company has pushed since year 2000. they stopped offering pension pans and instead offered their stock incentive plan and stock 401, it wasn't mandatory, so I did not go that way, but a lot of people did. Unless the company turns around, which at this point I doubt very seriously, those people have virtually no savings left except their initial investment.
And Hashutschosen, as I said, I'm sure they lots boat loads of money, but remember that the company match is only "theirs" to be had until you vest, at which time it becomes yours........Just trying not to make too many people scared. 401ks are still one of the best long-term investment that workers make, and one thing true, we are not saving enough globally, nor here in America (where we are pretty poor at that)
Viskar Zhragoth
I agree, but the savings are only as good as the company that manages them. If it was possible, I would have removed my 401 from the company that manages it as they too are a "red zone" investment, but I have no choice in the matter as the company and the legal system do no allow me to remove those funds from their 'care'. There is some funny business going on between our company and theirs which is what scares me the most.
EDIT: Agreed with your last post. Global economies have help "stick" the salaries, and we are one of those on the top that will be readjusted to a more "even" keel. We won't like it, and it will be slow and unsettling, but we have to avoid the panic mode that we might be about to fall into.
Viskar Zhragoth
heh yeah, panic only makes things worse. There is no use to panic and worry about things you can't do anything about, however, you should always plan for the worst possible future, and hope for the best possible future. Other than that, take it in stride and do what you have to do to keep going.
Well I don’t know what attitude this is, but here’s one of my reactions.
I’m glad I’m in my final year of college when this hit. Even if this gets pretty bad, I’m used to not living that much beyond my means. Granted, I am used to my folks helping me out right now… but that’s because I go to school full time. However my Warhammer purchases lately have been minimal (and will drop now that I have the army I want).
However, back to the subject, I guess it means I’ll be more realistic with my expectations end spending. I’ll live in an apartment, though I want one bigger then the one I am in now for school. I’ll put off getting a home maybe a few years or even up to five years so I know I can put a good down payment on it. I’ll take care of my car and keep it until it’s no longer practical to keep using. I won’t go on crazy vacations on a whim… though I have family in Europe so I might have to do “low budget” ones where I stay with them perhaps.
I have $11,000 in student loans to pay off once I graduate. That’s not terrible. I’m tempted to put off credit cards, but I might get one to build up credit and just buy a tank a gas every month and pay it off.
I guess it forces me to be more practical really. So should I be as worried?
_)
But in a global sense it is good for struggling countries in that it raises their economic means, but it really hurts the countries that have enjoyed economic abundance in comparisson. Though I don’t doubt these times will pass, but in reality, they probably won’t until the global economy is equally poor or middle class.