In regard to your question, I would offer the following (it’s a bit like answering a question with more questions)

I do not view an investment portfolio (401K, IRA, other investments) as an all or none proposition nor do I think others should as well.

1. What is your time horizon (meaning how old are you) until you retire?

2. How secure do you feel in your job?

3. Are your investments causing you to lose sleep? If so, then you I would offer that you are taking too much risk.

4. Are your investments diversified? (that is, a mix of stocks, bonds, short term funds, some international exposure)

As you answer some of those questions, you may be able to better determine how to approach your 401K.

I would strongly encourage you to continue to fund your 401K if you are able.

I would also strongly encourage you not to take the funds out and pay the penalty.

A 401K /IRA is supposed to be by its very nature a longer term savings vehicle but it allows you to shift funds. My sense is that the equity markets will take time to recover. Thus, I think there is better value in a mix of higher quality corporate bonds.

If you are looking for a little more yield you can invest in a divesified, high quality bond fund. You need to do some homework on the fund and see exactly what types of bonds are in the portfolio.

I hope this helps.

Thanks for writing.

The UK property market was so deregulated that properties in London were purchased by investors not homebuyers. Property price inflation was allowed to sky rocket and that infected banks worldwide. It also became an acceptable model world wide. The West had become addicted to hyper inflation. Better yet, rather than admit that teh economy was being built on hyper inflation, the UK and US removed property prices from their respective retail price indexes.

This meant the true rate of inflation was not being measured. Our employees were effectively having direct pay stolen but it did not matter – look how much your house is worth. All this did was generate more debt on the “value” of debt. Banks loaned money for people on modest salaries to buy giant SUVs that would not otherwise have been purchased by anyone other than Executives.

This “boosted” the economy more. Until the banks woke up and realised what they have done. The economy has no foundation. None. That is what recapitalisation means. Providing a foundation to debts already leant out. How are Governments doing that? Borrowing more.

do we keep them tied to the stock market and watch our money drain,

As a future column idea, would you have something like send in your questions and I’ll try to address them in a column?

My questions would be: Looking down the road a bit, How do we safe guard what’s left in our 401k and IRA? Do we keep them tied to the uostock market and watch our money drain, do we transfer to government securities even though there is no interest paid, do we cash out, pay the penalties and keep it under our mattress?

Thanks for writing for NQ.

So. Who’s Barack’s HUD nominee and what should we expect from him?

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/01/14/financial/f131304S19.DTL&feed=rss.business

I think you are writing for “everyman”. I for one appreciate it.