Investing Your Retirement in the Stock Market

Just a few years ago, investing your retirement dollars in the stock market seemed like a safe bet to grow your post-work nest egg. Nowadays watching the rollercoaster …

Just a few years ago, investing your retirement dollars in the stock market seemed like a safe bet to grow your post-work nest egg. Nowadays watching the rollercoaster ride that is our current market affects those 401(k) and IRA plans will make even the most seasoned investor think twice about dumping the majority of those retirement dollars in the stock market, but don’t give up on Wall Street just yet.

There is a reason people haven’t been afraid to play the stock market. Over a 10 year period the market has produced returns of up to 7 percent, virtually outperforming any other U.S. investment, according to MSNBC. In comparison U.S. Treasury Bills or Treasury Bonds return just 3 to 4 percent annually.

When dealing with the stock market and something as precious as your retirement money, the best and most frustrating strategy to enact is patience, which has been with some bone chilling losses being reported across the country. Over the past 15 months as much as $2 trillion in American’s retirement savings have been wiped out by the stock market. Individual 401(k) losses have ranged from 7.2 to 11.2 percent in the first eight months of 2008, according to

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While those numbers are nothing to scoff at it is important to remember that both time and history may be on your side, giving your retirement account hope for a better tomorrow.

Your age plays a large role in how much of your retirement should be in more aggressive investments, like the stock market. The younger you are, the more money should reside in higher risk investments, roughly 80 to 90 percent, according to CNN Money. That number decreases by over 20 percent by the time you reach age 60.

Although the very near future may still hold tough times for Wall Street, think of this, since 1926 stocks have beaten bonds some 85 percent of the time, according to CNN Money. Stocks now are selling at a relatively low price creating a real chance for gain in the coming years if you choose to invest. Playing a waiting game or pulling your money out now may cause you to miss out on future gains.

The current state of our economy may be a good time for you to reconsider whether your retirement accounts have the proper allocation according to your current situation. Instead of getting bogged down by worry and trading fee’s to bail out of stocks, simply make sure the risk/reward ratio you currently hold needs to change, instead of making any radical movements in your portfolio, according to PBS. No matter how worried you may become however, never completely stop or reduce contributing to your retirement.

Balancing diversity in risk and among investment options is one of the best ways to protect your money. Also never discredit the help of an experienced financial professional, especially in such economically challenging times.


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