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My AFORE already lost a chunk of money in my retirement savings, i'm not sure what to do, i'm afraid if leave the rest of my money i will lose even more and it's gonna take a while to recover those losses.

I'm considering:

  • Taking out the money to a regular savings account and wait for the crisis to pass
  • Just wait and see what happens

Any recommendations? I worked hard to save that money and have a decent retirement when i become older.

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    If anyone knew the future, they'd be able to accurate tell you exactly what to do now. But no one does. If you make it a goal to become financially literate, it's possible to avoid the kind of carnage that people's portfolios experienced in 2000, 2008 and in the past month. But at this point, the horse has left the barn and it's a far more painful decision. Mar 14, 2020 at 21:23
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    Do you need this money anytime soon (within the next 12 months)? Mar 14, 2020 at 22:32
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    You are suggesting you sell low and then buy high (once the crisis has passed). In general, people advise doing things the other way around. Buy low, sell high. Mar 15, 2020 at 12:40
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    Are you currently retired and living off this money? Planning to use it to retire in the next 1-5 years? Not planning to retire for 20+ years?
    – yoozer8
    Mar 15, 2020 at 15:09
  • No i'm not in need of that money for now
    – Progs
    Mar 17, 2020 at 17:47

3 Answers 3

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The critical question is posed in a comment by BernhardDöbler: do you need this money soon?

The danger in selling is that you may be following the pattern of many casual investors: fear of missing out drives them to buy stocks when the market is very strong and then fear of losing all drives them to sell when the market is very weak. They end up "buying high and selling low" which is a guaranteed way to lose money.

On the other hand, if you do need the money in the near term, you pretty much have to accept the loss and sell. Whether you should sell now or a month from now is probably not answerable by anybody without a crystal ball.

Due to the Covid-19 pandemic, the market has just received a solid wallop of information that a bunch of companies are not going to make nearly as much money this year as they thought they were. Some companies may experience a cash flow crisis that bankrupts them. If you own individual stocks and have the analysis skills, you might review your holdings and try to figure out if any of the companies you hold are in danger of going under. If your retirement is in index funds that you don't need for a few years, then I'd suggest sitting tight. Eventually the pandemic will end, planes will start flying again, and the markets will likely return to some semblance of normal.

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  • That's right no one has a crystal ball. I recall one study of retail investors that showed their under-performance comes from over-trading which includes paying too much in commissions and buying high during booms and selling low during panics. Mar 15, 2020 at 15:54
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    Correct, no one has a crystal ball, knowing what the future will bring. I'm not recommending that anyone buy, sell or hold, just saying that if the market repeats 2000 and 2008 (down 50%), selling today will look quite clever. Conversely, if markets recover soon, it would have been an unwise decision. There are no guarantees either way. Mar 15, 2020 at 18:27
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There is no sure prediction of the future, but historically, the markets recover quickly (within months, at max up to three years). Taking your money out after the markets dropped is typically a way to lock in the losses, and miss the rebounds. Going into bonds means to lose again when the market go up.

Nobody knows for sure, but the professional recommendation is to sit it out.
I think at Xmas you'll be back and happy you waited.

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    I think by sit it out aganju means stay the course and don't change anything. Mar 15, 2020 at 15:47
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possibly switch to bond funds instead of stock funds

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    That would mean to lose even more when the markets rebound.
    – Aganju
    Mar 15, 2020 at 1:28
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    Or it could mean losing less if the sell-off continues. It's just an impossible question to answer if you're focused on estimating the future return. You need to estimate the risk from the realized volatility and what you are using the money for and when. Mar 16, 2020 at 17:49

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