Five Ways to Recoup Lossesh
by Efin Advisor | January 25, 2009
With retirement cushions beginning to look more like throw pillows – many families are wondering: “How can we recoup some of our losses?”
Bloomberg commentator John F. Wasik spelled out five ways any household can save and use their money prudently even in a bad year.
One, keep investing, but do it in yoursellf! Continue to contribute to your 401(k) plan. Keep in mind that taking your employer’s matching contribution, if you have one, is still a 100 percent initial return on investment. If you don’t feel comfortable investing, save up cash and put it in money-market funds, I-bonds or certificates of deposit.
Two, appeal your property taxes. Do this every year by reviewing your home’s assessed valuation. If it’s too high compared with similar properties, talk to your local assessor or appeal it on the county level. If you win the argument, you can usually freeze or lower your real-estate tax bill.
Shop Around for Insurance
Three, yes, shop around for insurance. Everything from increasing your deductible, or out-of-pocket expense, to lowering premiums across the board on life, health, homeowner’s and other policies. [Efinancial can help in this department. - Ed.]
Four, reduce risk. This should be your most powerful theme this year. Buy bonds or mutual and exchange-traded funds to lower the percentage of stocks in your portfolio. If you are in an adjustable-rate mortgage, cut your interest-rate risk by refinancing into a fixed-rate loan. Pay down your credit cards.
Five, beat inflation. If you have decades before you want to retire, you should have some portion of your holdings in Treasury Inflation-Protected Securities and dividend-paying stocks.
Will the rebound begin this year or will there be another year or two of pain? Wasik says he can’t answer that burning question, although he remains optimistic – while wincing at his retirement-plan statement.
Thanks for this advice efinancial! I had not even thought about revaluing my house or getting a new insurance policy. I know that you mention efinancial can help in this area- do you offer free rate quotes? I am certainly willing to take a look at how much I am spending on insurance and to compare it to other coverage. I think that with a better policy, and a re-evaluated property tax, I will start to repeal some of the damages from this recession.
Reply
I am a little confused. If I keep investing in thes market, how will that help me recover some of my money, and not just risk what I have left. I still have a 401(k) plan with my employer, but what if my employer is no longer employing me in a month, or what if they go out of business entirely? I am afraid that I will lose everything. Wouldn’t it be better to put my money in treasury bonds?
Reply
Antoine Reply:
January 28th, 2009 at 9:01 am
You can rollover your 401k if you get fired. A financial planner can go over all of that with you. the great party about a 401k is that even when it takes a hit, you still have double what you normally have. if you invest in it, your employer invests in it so you get money and hte economy gets slightly better. you should probably just weather the storm and im sure you’ll keep your job
Reply
First off, i do think we will see a recovery this y ear. Most economists and economic institutions are predicting we will get out of this by the end of the year and I really am not in a place to disagree with this statement, with my limited financial knowledge.
I think these are some great ideas too. the 401k idea just makes sense. doubling your money instantly is always a good policy. Withdrawing from these plans now will just make it harder for poeple to recoup their losses in teh long run
Reply
I actually think selling off your 401k makes sense now. It may be at a loss, but when you need the money you need the money. Its that simple. Its easy to talk about long term planning when you are doing fine, but I’ve got to feed my kids and i my company goes under, which seems to be a distinct possibility, im going to have to tap into my savings, incluidng the 401k. I hope obama’s stimulus package is helpful
Reply
Its remarkable how much money you can save just by getting new life insurance quotes or a new cable plan or anything like that. All contracts should be looked at when you haivng troubled time. I saved something like 1000 a month just by looking at a few of my bills and renegotiating them for better deals. I highly recommend it for anyone
Reply