Our investments have been losing money for a while now and I don't see it turning around anytime soon. Pentegra has a savings account that earns around 2% a year. Is it crazy to store our contributions in there until the market turns around? Our financial planner keeps touting the "dollar cost averaging" plan but we're wondering if we should hedge our bets.

If it's not crazy, then would you also it for your TDAs? TIA!

Some questions;

1) what are your investments for from a strategy standpoint? Retirement as example?
2) when are you looking to exercise on these investments per question 1
3) what date will we be at the bottom? Many here I am sure would like to know this as well.

Google- dollar cost averaging

You need to be like Cole Trickle in Days of Thunder and learn to drive through that smoke

Txmoe said:

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Our investments have been losing money for a while now and I don't see it turning around anytime soon. Pentegra has a savings account that earns around 2% a year. Is it crazy to store our contributions in there until the market turns around? Our financial planner keeps touting the "dollar cost averaging" plan but we're wondering if we should hedge our bets.

If it's not crazy, then would you also it for your TDAs? TIA!

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is this a corporeate 401K retirement or a private brokerage investment account?

makes a HUGE difference.

if this is your retirement account, you would be an idiot to stop contributing when you could be buying shares at one year, two year and all time lows.

if it's a private equity brokerage with no real tax advantages, then yes, you may want to wait for a further bottom.

The time to ask these questions is when dividend yields were < 2%, PE ratios in the 30s, and everyone thought everything was going to the moon.

Now.... the dividend yield on the broadly diversified international fund VXUS (over 7,000 corporations) is yielding 3.89% and US CAPE Ratio is back under 30 (29.10). Things might look bleak based on past prices, but that means the expected future returns are higher than they were before. (Edit to add: intermediate corporate bonds are yielding 4.60%). It's finally good to be a saver again.


A lot of investors should use the George Costanza method of decision making.... do the opposite of your primal instincts!




Book recommendation: Your Money and Your Brain

LMCane said:

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Txmoe said:

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Our investments have been losing money for a while now and I don't see it turning around anytime soon. Pentegra has a savings account that earns around 2% a year. Is it crazy to store our contributions in there until the market turns around? Our financial planner keeps touting the "dollar cost averaging" plan but we're wondering if we should hedge our bets.

If it's not crazy, then would you also it for your TDAs? TIA!

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is this a corporeate 401K retirement or a private brokerage investment account?

makes a HUGE difference.

if this is your retirement account, you would be an idiot to stop contributing when you could be buying shares at one year, two year and all time lows.

if it's a private equity brokerage with no real tax advantages, then yes, you may want to wait for a further bottom.

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Right or wrong we are doing this. My way of hedging a little bit.

Also not talking a ton of money in the grand scheme of things on the brokerage taxable accounts. I'm basically just not reinvesting dividends or my usual monthly budget to that account. Just letting the cash float for now.

LMCane said:

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Txmoe said:

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Our investments have been losing money for a while now and I don't see it turning around anytime soon. Pentegra has a savings account that earns around 2% a year. Is it crazy to store our contributions in there until the market turns around? Our financial planner keeps touting the "dollar cost averaging" plan but we're wondering if we should hedge our bets.

If it's not crazy, then would you also it for your TDAs? TIA!

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is this a corporeate 401K retirement or a private brokerage investment account?

makes a HUGE difference.

if this is your retirement account, you would be an idiot to stop contributing when you could be buying shares at one year, two year and all time lows.

if it's a private equity brokerage with no real tax advantages, then yes, you may want to wait for a further bottom.

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What? So it's good to invest in a tax advantaged account but it's better to wait in a regular brokerage account?
You might want to enlighten us lesser informed.
To answer the OP's question, how many employer matches do you forego by not contributing to your 401K?

OldArmyCT said:

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LMCane said:

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Txmoe said:

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Our investments have been losing money for a while now and I don't see it turning around anytime soon. Pentegra has a savings account that earns around 2% a year. Is it crazy to store our contributions in there until the market turns around? Our financial planner keeps touting the "dollar cost averaging" plan but we're wondering if we should hedge our bets.

If it's not crazy, then would you also it for your TDAs? TIA!

---

is this a corporeate 401K retirement or a private brokerage investment account?

makes a HUGE difference.

if this is your retirement account, you would be an idiot to stop contributing when you could be buying shares at one year, two year and all time lows.

if it's a private equity brokerage with no real tax advantages, then yes, you may want to wait for a further bottom.

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What? So it's good to invest in a tax advantaged account but it's better to wait in a regular brokerage account?
You might want to enlighten us lesser informed.
To answer the OP's question, how many employer matches do you forego by not contributing to your 401K?

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401ks: you continue to invest here because of tax advantages and you are still getting free money from your employer.

Taxable: those advantages don't exist so it's more of a straight market timing game. Which is always risky and can bite you in the ass.

YouBet said:

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OldArmyCT said:

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LMCane said:

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Txmoe said:

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Our investments have been losing money for a while now and I don't see it turning around anytime soon. Pentegra has a savings account that earns around 2% a year. Is it crazy to store our contributions in there until the market turns around? Our financial planner keeps touting the "dollar cost averaging" plan but we're wondering if we should hedge our bets.

If it's not crazy, then would you also it for your TDAs? TIA!

---

is this a corporeate 401K retirement or a private brokerage investment account?

makes a HUGE difference.

if this is your retirement account, you would be an idiot to stop contributing when you could be buying shares at one year, two year and all time lows.

if it's a private equity brokerage with no real tax advantages, then yes, you may want to wait for a further bottom.

---

What? So it's good to invest in a tax advantaged account but it's better to wait in a regular brokerage account?
You might want to enlighten us lesser informed.
To answer the OP's question, how many employer matches do you forego by not contributing to your 401K?

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401ks: you continue to invest here because of tax advantages and you are still getting free money from your employer.

Taxable: those advantages don't exist so it's more of a straight market timing game. Which is always risky and can bite you in the ass.

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well said.

Old Army CT do you understand what we are stating here?

If he is discussing a corporate 401 with FAVORABLE tax treatment, then you might as well keep investing as worst case it is a place to store non-taxable income.

if it is for his after tax income- then he has already lost that benefit. so then it just becomes "can he time the market better than any of the pros on Wall Street" and try to find the perfect bottom for a panoply of stocks and ETFs.

I have both corporate 401K accounts and private brokerage, and I continue to pump as much cash into them as possible the last 6 months.

then again I am 51 and hopefully have another 30 years of investing ahead of me.

I do time the market and have done pretty well with it overall but I'm in finance and follow the market closely. It seems to really bother some people. I don't pick the absolute tops or bottoms but when I see significant warning signs I will exit and start dollar cost averaging back in on a scale. I did this back at the start of this year.

Cash as an investment has out performed the market recently (even with inflation) so it's been a good time to hold cash instead of buying into the market.

Hindsight will always shine on the good and bad investments we make - just research and decide, learn from your mistakes and move on. As said above - trying to time the market does not work unless you get lucky.

Buy value at any time but consider using cash for other investments like paying the tax on a roth conversion when values are low (if you're in a low tax bracket).

Stocks are on sale right now.

jws87ag said:

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Cash as an investment has out performed the market recently (even with inflation) so it's been a good time to hold cash instead of buying into the market.

Hindsight will always shine on the good and bad investments we make - just research and decide, learn from your mistakes and move on. As said above - trying to time the market does not work unless you get lucky.

Buy value at any time but consider using cash for other investments like paying the tax on a roth conversion when values are low (if you're in a low tax bracket).

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I disagree, makes no sense to hold cash right now when stocks are on sale. If stocks were at all time highs, then it might make more sense to hold cash.

Retired now, but were self employed for our whole careers so no corporate input to what we've accumulated.

Our fee only investment guy (he's now retired, too, and we sure do miss his advice) saw what we were making in the property rental arena and it we discussed & weighed what we'd put in to our IRA accounts vs. profit from our rental units.

We stopped putting into our IRAs and continued to buy houses & Ag Exempt acreage. We still have money in the market and it has done great over the years. At the height of this nightmare, we were down on those investments about 25% - hurts - but the rent money is still rolling in and about half of our properties have recouped cost & renovations so we are back to 0 on those investments. All of them will be paid off & 100% recouped within 3 years. Every property has more than doubled - some tripled - in value.

We are long term investors in the market and still dabble, but not as much. We're also older than lots of people on here, so no longer take the risks we used to. These properties are our "retirement accounts" - producing income & can easily sell at any point should we need to.

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They recently sold off their rental properties at height of market (100% equity in all) and will live off those proceeds until they die.

They are 80 and still have never touched any of their market investments other than RMDs. Didn't have to due to passive income from rentals.

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We're not 80 yet.... and we still self manage them all, so not quite "passive income" but still doable for us & it provides all we need. We plan to sell one at a time to avoid giant cap gains & depreciation recaptures when/if the time comes that we need to. Our market stuff has been sitting in the same stocks/funds for years & we have no plans to change anything either. It's up, it's down but still way more than we ever put in.

edit: Not avoid cap gains - those will be there, but we don't want them all at once.

YouBet said:

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schwack schwack said:

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Retired now, but were self employed for our whole careers so no corporate input to what we've accumulated.

Our fee only investment guy (he's now retired, too, and we sure do miss his advice) saw what we were making in the property rental arena and it we discussed & weighed what we'd put in to our IRA accounts vs. profit from our rental units.

We stopped putting into our IRAs and continued to buy houses & Ag Exempt acreage. We still have money in the market and it has done great over the years. At the height of this nightmare, we were down on those investments about 25% - hurts - but the rent money is still rolling in and about half of our properties have recouped cost & renovations so we are back to 0 on those investments. All of them will be paid off & 100% recouped within 3 years. Every property has more than doubled - some tripled - in value.

We are long term investors in the market and still dabble, but not as much. We're also older than lots of people on here, so no longer take the risks we used to. These properties are our "retirement accounts" - producing income & can easily sell at any point should we need to.

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Good strategy. Same thing my parents did verbatim.

They recently sold off their rental properties at height of market (100% equity in all) and will live off those proceeds until they die.

They are 80 and still have never touched any of their market investments other than RMDs. Didn't have to due to passive income from rentals.

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This is underutilized by so many people at a young age. The quicker you can start building a second income stream, the better.

I came to this late, but slowly building a passive income foundation for my wife & I so that we can keep our other savings(my 401K that I maxed from day 1 & had high company match for a long time) for further down the road.

OP needs to analyze his family needs & where he's at on his timeline.

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I came to this late,

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We did, too. We found a small, East TX town to eventually retire to back in 2008 while still working in Dallas. We bought our first rental property in 2015 - a 4-plex that needed tons of work that we mostly did ourselves and thru many conversations with our then investment guy, decided that this was our way to retire quicker with a good income stream. No way we could have done what we did in Dallas or a large market - even back then.

We retired a few years ago & left the city to focus on things here. I don't think it will ever be completely "passive" as there will always be shifts/changes in the market to keep up with, but it's a great way to build wealth.

12thMan9 said:

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YouBet said:

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schwack schwack said:

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Retired now, but were self employed for our whole careers so no corporate input to what we've accumulated.

Our fee only investment guy (he's now retired, too, and we sure do miss his advice) saw what we were making in the property rental arena and it we discussed & weighed what we'd put in to our IRA accounts vs. profit from our rental units.

We stopped putting into our IRAs and continued to buy houses & Ag Exempt acreage. We still have money in the market and it has done great over the years. At the height of this nightmare, we were down on those investments about 25% - hurts - but the rent money is still rolling in and about half of our properties have recouped cost & renovations so we are back to 0 on those investments. All of them will be paid off & 100% recouped within 3 years. Every property has more than doubled - some tripled - in value.

We are long term investors in the market and still dabble, but not as much. We're also older than lots of people on here, so no longer take the risks we used to. These properties are our "retirement accounts" - producing income & can easily sell at any point should we need to.

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Good strategy. Same thing my parents did verbatim.

They recently sold off their rental properties at height of market (100% equity in all) and will live off those proceeds until they die.

They are 80 and still have never touched any of their market investments other than RMDs. Didn't have to due to passive income from rentals.

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This is underutilized by so many people at a young age. The quicker you can start building a second income stream, the better.

I came to this late, but slowly building a passive income foundation for my wife & I so that we can keep our other savings(my 401K that I maxed from day 1 & had high company match for a long time) for further down the road.

OP needs to analyze his family needs & where he's at on his timeline.

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I grew up in this model and I haven't done it. More a function of going all-in on corporate world and not having much time for this, but there are days I regret not doing it. And I may yet still!! Price of entry high right now.

Brother and I will inherit my parent's house on the 18th green of a nice golf course so we might VRBO it, but I doubt it. And we have a house on the coast on wife's side of family we could absolutely VRBO if we wanted to, but it's too damn far away and hard to manage from Dallas. We will end up selling that.

And then I will regret that on for sure, but it's not my decision.

Someone else can comment on if this is inaccurate or not, but it's a long game.

https://instagr.am/p/CfUEw6rsUHx