Thursday, March 20, 2008

My 401K is Down.

I mean, really down. It can be hard to get an handle on gains in investment accounts when you're making regular contributions. Of course I saw the recent monthly statements and knew I was having some down months, but it didn't bother me too much. I just figured I could roll with it, and that it just meant I'd shaved a few points off the heights my account had reached, just a bump in the road during an overall upwards trend. And of course the balance is usually increasing just because I am contributing almost $1,400 a month to the account.
But last night I looked at my portfolio in Quicken and it says the value of my account is down 6%. As in, 6% below the cost basis of the investments I've made. As in, 6% of my hard-earned contributions have evaporated. WTF!?!?!?
Of course this account is complicated. There are my contributions going in, and employer contributions, and I have rolled over 2 earlier 401K accounts. Maybe the cost basis is not accurate. But still! I'm a bit worried. My E*Trade account is down, but it's still showing a 40% gain over the cost basis. My E*Trade Roth IRA is also down, below its cost basis, but I knew I had rather conservative investments in that account that didn't do all that well when the market was booming, and I haven't had them as long, so it was no surprise to be down a bit.

As always, I am trying to take the long-term view and not worry too much, but I can't help wondering if I've picked some real losers in that 401k account, and whether I should do anything about it. But on the other hand, the more I think about it, I can't imagine that my Quicken number is accurate-- if I have had several years of that account posting positive gains of 7-10% each year, it would take a lot worse of a beating than we're having now to wipe out all those prior gains... I hope!


JB said...

Don't worry about it... I doubt you've picked bigger losers than any other funds right now.... just keep buying and reap the rewards in a few years.

mOOm said...

If you've had the account several years I doubt that is likely and the cost basis is screwed up which is easy to do. But it is possible to be back to 2006 levels depending on what funds you have. Why not post a list of the funds?

Anonymous said...

If you did the roll-overs recently, your cost basis is likely off. When you rolled over, you had to dispose of all the funds in your previous accounts and re-purchase new funds in your current account. This means your cost basis includes all the gains you had from the previous two accounts over the years.

Chief Family Officer said...

I understand how you feel, since my consolation when I look at the balance in my 401(k) is that at least I've still got a net gain. I'm sure anon is right that Quicken isn't taking into account the rollovers - hopefully that's all it is!

Anonymous said...

Alright, take a deep deep breathe, I'm going to tell you what rich, smart people are doing right now. They have sold all their stocks to the common folk of America, to people like you and the readers of this blog that invest in 401ks. Do you know how I know this? Look at the 13 week treasury note, the interest on this note is .50%, basically a free loan to the government. Why would anyone in their right mind lend money out for three months for free when your checking account will give you more interest? Because these people are so scared of losing their principle that they don't care about the interest. They just want to make sure that the money is there in three months.

There is 36 Trillion dollars worth of debt in the USA, GDP is 13 Trillion. There is 500 Trillion derivative contracts outstanding, global GDP is only 50 Trillion. What is happening right now is massive de-leveraging, meaning banks are telling all the hedge funds that they aren't allowed to borrow 30 to 1 anymore. No matter what the idiotic media says there is no way to fix this until housing prices start to rise again, which probably won't be for another decade. Hang out tight, and make sure you sell those stocks sometime soon.

Then Things said...

Yeah my roth just went from 21k to 20k- ouch!!! Just index funds for me.