Don’t Stop Retirement Contributions
It’s been hard to miss the recent downturn in our economy – you see it on the news and hear it on the radio. The current financial crisis has caused most retirement accounts to lose a lot of money. While it’s never a good thing for your retirement accounts to lose money, especially when you are at or near retirement, it’s not the end of the world. The one thing you shouldn’t do when the market drops is stop your retirement contributions. In fact, now may be a good time to increase your retirement contributions.
It may seem counterintuitive to invest when the market continues to drop, but it actually might be the best financial move you can do right now. Remember, the point of investing is to buy low and sell high. With the market lower across the board, this might just be a golden buying opportunity.
An investment method that takes advantage of the buy low sell high principle is value averaging, which is similar to dollar cost averaging, with the exception that you invest more money when prices drop and invest less money when prices increase.
So whether you invest in the TSP, a Roth IRA or Traditional IRA, a 401(k), or other retirement plan, now is not the time to stop investing. It might just be a good time to increase your contributions. If you have an investment horizon of 10 years or longer, chances are your investments will have ample time to catch up.
Related posts:
- 2009 Retirement Plan Contribution Limits
- What Should You Do with your TSP When You Leave the Service?
- What is the Thrift Savings Plan?
- Where Should You Invest – TSP or IRA?
- 2009 TSP Contribution Limits
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October 21st, 2008 at 9:42 am
Investing steadily and evenly (dollar-cost averaging) makes these types of markets an investor’s dream come true.
October 26th, 2008 at 11:20 am
[...] Don’t Stop Retirement Contributions. I think now is a good time to continue your retirement contributions. In all likelihood you will be buying at a discount – provided you have a long term investment horizon. [...]
November 17th, 2008 at 10:10 am
[...] explains that it’s counter intuitive to increase not decrease retirement funding in Don’t Stop Retirement Contributions posted at Military Finance Network. I agree, but I would make sure in this environment you have a [...]
November 21st, 2008 at 8:17 am
[...] It almost pains me to write this post because I’ve always been the one to gloat about my retirement savings. Granted, being only 26, I don’t have much of a nest egg established just yet, but from my very first day of professional employment, I’ve contributed heavily to my 401Ks and more recently, my Roth IRA as well. I’m a very firm believer in the “save early and save often” mantra because I know, like many of you reading this, that consistent and disciplined investing is absolutely essential to a healthy retirement. I know that I shouldn’t stop investing in my retirement accounts. [...]