(Part 1)
As many already know the entire world economy is having an economic meltdown. Businesses are closing, stocks are becoming worthless and the number of people unemployed is reaching unprecedented levels. Where does this leave us? I plan to evaluate the last year of economic activity, list several facts and then lead to a conclusion of what is to be done in the future as a God fearing Christian.
Looking at 2008 we saw in incredible loss of wealth in the US and also the world. Moving into the 21st century a trend began as people started investing more and more money into their retirement accounts which is usually comprised of mutual funds through 401K's According to the
Employee Benefit Research Institute (EBRI) In 1980 only 16% of Employees invested in 401K plans this number rose to over 60% in the year 2000 and has maintained this high level.On average the American worker contributes 7.5% of their yearly earnings to their 401K
The average Household income in the USA is right around $50,000 this means on average a person puts $3,750 a year into their 401K
The stock market
On January 4th, 2008 the S&P 500 was worth $1,412 on December 31, 2008 $903
This was a 38.05% loss! to put it in perspective lets say you put $4,000 dollars in an account for 10 years starting in 1997 with a 10% return you would have built up around $46,000 and you say hey things are looking pretty good I have almost one year of income built up just in my retirement account. You then go into 2008 and lets say your retirement account outperforms the S&P 500 by 1% so you lose 37% which is $17,020 you now have just around $29,000
We started 2008 with $46,000 and ended it with $29,000. Lets say you were doing really well and could put $40,000 in per year. This changes your outcome to
We started 2008 with $460,000 and ended it with $290,000
This was a 38.05% loss! to put it in perspective lets say you put $4,000 dollars in an account for 10 years starting in 1997 with a 10% return you would have built up around $46,000 and you say hey things are looking pretty good I have almost one year of income built up just in my retirement account. You then go into 2008 and lets say your retirement account outperforms the S&P 500 by 1% so you lose 37% which is $17,020 you now have just around $29,000
We started 2008 with $46,000 and ended it with $29,000. Lets say you were doing really well and could put $40,000 in per year. This changes your outcome to
We started 2008 with $460,000 and ended it with $290,000
This is not a scenario, this actually happened in 2008 leaving a lot of soon to retire people with very sick feelings in their stomach. As well as new to the market people who were just starting out. The important thing to remember in these circumstances is to place your trust in God and seek his face. The next few days I will lay out ways to limit that sick feeling you get in your stomach once you see your 401K statement and what we should really be investing in.
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