News that the Treasury Department will unveil their new plan for bank "bad-assets" has the stock market futures pointing towards a positive opening this morning. But what does that mean for people like you and me who have our own "bad-assets" still in the market, i.e., stocks and mutual funds that are down considerably since last year in our 401k and IRA plans? There are basically 3 things you should do:
1. Keep adding new money to your retirement plan each month. This is called dollar-cost averaging. You add the same amount of money each month and buy shares of your funds at the market price. This takes the emotion out of investing and you will come out ahead in the long run.
2. Don't worry what the talking heads on CNBC say. Media focus is short term. Almost all discussion is centered on what to do in the short-term, but most people are or should be, long-term investors.
3. Save more for retirement. If you are able, increase your monthly with holdings by a percentage point or two. You will ultimately save more for retirement and make up your losses faster. If you can't save more, take a look at your family budget and trim expenses where possible to free up cash.
The light is beginning to shine at the end of this bear market tunnel. Don't give up this late in the game. As hard as these tips might seem to do, it could make the difference in how comfortable you live in your future retirement years, and it might help you be able to retire on time. Nobody wants to come out of retirement, except Brett Favre!
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