Money Tip
I've written before about how academics tend to not live in reality. And because of that, they have about as much financial sense as a 2 year old. Thank God they... we have a retirement plan run by TIAA-CREF, run by just about the best fund managers around.
So in this shitty market, TIAA-CREF has been sending out emails more frequently, trying to calm frayed nerves. It's completely understandable.
These emails contain many FAQs about what one should do in this volatile climate.
Here's one question I'd like to take myself...
The value of my 403(b) retirement account is declining because of the recent market volatility. I am considering holding off on making additional contributions until the market starts to go up again. Is that a good idea?
TIAA-CREF gave a measured, rather educational answer. It explained as best it could how there's no single right answer for everyone. In a few paragraphs, it went over the wisdom of dollar-cost-averaging and set a tone of calm reassurance.
I'm going out on a limb here, not giving you investment advice, but telling you how the way I see it, there is only one option.
Hold off on making contributions until the market gets bullish?
No.
I mean, HELL NO.
Now is actually the best time to MAX OUT your retirement contributions. Shares are "on sale". Whenthe market bounces back up, your returns go up exponentially.
After the Lehman Brothers collapse, after their shit and everyone else's hit the fan, I walked into the HR office and maxed out my tax-sheltered contributions for the year. I can fortunately afford to run a deficit in the short term.
That's right, from now until the end of the year, I'm spending more than I'm taking in. That money I'm putting off won't be taxed, and is gobbling up some delicious value. Mmm-mmm Good.
So in this shitty market, TIAA-CREF has been sending out emails more frequently, trying to calm frayed nerves. It's completely understandable.
These emails contain many FAQs about what one should do in this volatile climate.
Here's one question I'd like to take myself...
The value of my 403(b) retirement account is declining because of the recent market volatility. I am considering holding off on making additional contributions until the market starts to go up again. Is that a good idea?
TIAA-CREF gave a measured, rather educational answer. It explained as best it could how there's no single right answer for everyone. In a few paragraphs, it went over the wisdom of dollar-cost-averaging and set a tone of calm reassurance.
I'm going out on a limb here, not giving you investment advice, but telling you how the way I see it, there is only one option.
Hold off on making contributions until the market gets bullish?
No.
I mean, HELL NO.
Now is actually the best time to MAX OUT your retirement contributions. Shares are "on sale". Whenthe market bounces back up, your returns go up exponentially.
After the Lehman Brothers collapse, after their shit and everyone else's hit the fan, I walked into the HR office and maxed out my tax-sheltered contributions for the year. I can fortunately afford to run a deficit in the short term.
That's right, from now until the end of the year, I'm spending more than I'm taking in. That money I'm putting off won't be taxed, and is gobbling up some delicious value. Mmm-mmm Good.
posted by Teach | 4:52 PM
2 Comments:
I gotta say I disagree with your assessment of TIAA-CREF. Their funds are average to below average at best. My fiance is forced to invest with them to get her match...if it wasn't more the match it certainly wouldn't be worth it and I'd invest the money myself in much better, and cheaper mutual funds, via an IRA. I mean, c'mon a 0.49% expense ratio for an index fund! It's an index fund! My left nut could invest an index fund for less expensive! Ever hear of Vangaurd???
But anyway...gotta keep up with the blog man, startin' to lose interest here!
Yeah, see, I can't say anything bad about Vanguard. They're truly excellent. I stand corrected. Maybe "best fund managers around" overstated TIAA-CREF's appeal. And you know what, their monopoly on certain professions must be maddening for their competitors.
Took me a while, but finally accumulated stories about colleagues at the new job. Summer's here. So I have time to write. Give me a few days.
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