Posted by jd b puller on January 14, 2009 at 17:14:28 from (65.87.162.161):
In Reply to: Denial? posted by farmer boy on January 14, 2009 at 16:48:11:
Spook said: (quoted from post at 21:53:24 01/14/09) Yup, but if you have a date, and a "number", that you are planning on, either that dates gotta move out, or the number has gotta get smaller.
Spook, look at it like this...as long as your planned retirement date is AFTER the market recovers, you're in the good.
Let's say you have $500,000 invested with an average share price of $100/share - you have 5000 "shares".
Now, the market takes a crap like it did, you now have $250,000 - but you still have 5000 "shares".
Now, when you buy, you are buying at the "sale price", so you buy more shares. Nobody knows how long this market will stay like it is, or how it will "recover", but if you assume it stays like this for a while, the longer it stays low, the more you can buy. When your friend says "recover", I'm assuming he means that the market would recover to teh 2008 level adjusted up for inflation/increase. At that point, since you have more shares and the value of the shares is now what it would have been, you are "ahead" of the steady 4-6% you were gaining (2 years ago I was +27%, last year it was -42%).
Except for the struggle of watching your accounts dwindle, and the frustration of realizing that it took you 10 years to accumulate that money and 10 months to lose 1/2 of it. I'm still ok with it. If you're 5 years from retirement, you might want to rethink that date. I'm 15 years away.
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