401K

 

  • John A 7:04 am on October 31, 2009 Permalink

    Wow- ther are some really bad answers here so I had to interject.

    I understand what you are asking even though some people have chosen to nitpick on the "recession" issue.

    What you want to know is what investments (available through mutual funds) will tend to be more stable, or even increase when the rest of the stocks are bleeding into the carpet? Yes?

    The ones that are negatively correlated to the market as a whole will perform best in these periods. There is never a guarantee but based on the nature of the assets I will list, and historical data over the last 80 years they will tend to do this for you.

    1) Funds which invest DIRECTLY in real estate. I’ll say it again. DIRECTLY in real estate. 90% of the funds out here invest in companies (stocks) that tend to benefit from strong real estate markets. Its not the same thing. Cashflows are much different. If you check the returns of these funds you’ll see that. There are always exceptions for say …. a subprime housing meltdown but historically it works.

    2) Gold. When inflation runs high and interst rates spike to fight it, the resulting increase in the cost to finance debt usually dampens equity growth. The value of the dollar declines and money flows into more stable types of currency…gold. This relationship has become less exact over the years as the value of the dollar has drifted away from the gold standard but generally speaking its a strong negative correlation.

    3) Funds which are manged in a STYLE (growth, value, contrarian) that happens to benefit, or at least not get killed, by whatever economic trend is currently imposing itself on our economy. It is not possible to predict which style will be dominant ahead of time so DIVERSIFICATION allows you to hold a at least a portion of your money in a favourably managed fund.

    4) A newer type fund introduced in the last couple of years designed for is steady cashflow and resiliency despite stormy markets is INFRASTRUCTUE fund. Trillions will be spent globally in the coming decades to create and replace new and existing bridges, roads, airports, power grids etc. etc. These funds will zero in on a company which is well positioned in their specific industry to benefit from this trend. Preference is given to companies who have an oligopoly in that niche market, and especially those who have a history and are well positioned to get future contracts when there is open bidding.Once again check out the results.

  • jpr302001 7:04 am on October 31, 2009 Permalink

    a balanced portfolio heavy on the bonds

  • kckid2 7:04 am on October 31, 2009 Permalink

    Your post mentions 401(k). Those plans generally only permit a select few choices. So, it wouldn’t be possible to answer your question without knowing what was available to you. And even then, to know the best would require knowing the future.

  • keral 7:04 am on October 31, 2009 Permalink

    dynamic plan of icici

  • Bob W 7:04 am on October 31, 2009 Permalink

    .A recession is two consecutive quarters of no growth

    We ain’t there. Don’t listen to Katie, Brian and Charlie. If it bleeds, it leads

    I would use an index fund or a fund that invests in Large Cap companies ..those tend to be recession proof…Like a large cap growth fund.

  • Nino Brown 7:04 am on October 31, 2009 Permalink

    I feel that you shouldnt invest based on what is happening, but more of your personal timeline, and risk profile.

    example- the market is already down— so we missed the chance to be conservative. Looking from this point forward- if you are conservative, you may not get all the upside when this thing turns around.

    Also- if you are age 60 or 30 (random examples)- you have very different risk profiles since you cant afford to lose too much when you are close to retirement. If you are younger, you probably want to be buying stocks and stock funds right now (the right ones).

    sorry for the long answer- but your position should more be determined by you- than what is happening in the presses.

    Good Luck!

  • powe t 7:04 am on October 31, 2009 Permalink

    Invest in ETF: ETFs are cheaper than mutual funds. ETFs have very low annual expenses, nearly 20 basis points or 0.2% less. As against this, actively managed mutual funds show average expenses exceeding 135 basis points (1.35%). This does not include the extra 2% – 5% as loads, 12(b)-1 marketing fees, transactions costs, and soft dollar expenses mutual funds, passed on to you but never informed, except in very fine print that nobody cares to read.
    http://debts-to-wealth.com/category/Why-Invest-in-Exchange-Traded-Funds.html