Can we sell stocks now?
Dear Terry,
I have followed your column for years and I am an ardent fan.
I am 70 and my wife is 61. We have our retirement savings with Morgan Stanley in a simple IRA plan provided her by the company where she has worked for years. I am retired and receive a SS check of approx. $2000 monthly.
We now have (besides some emergency savings in short term CDs) and all our 401K savings with Morgan Stanley, and based on their advice 75% is in equities, 15% in fixed income, and 10% in what they call Alternatives, whatever that is?
While we were quarantined at home, watching our 401K plan lose at least 20% of its value, in 2 short weeks, we panicked. We called our administrator and asked them to move our money into someplace safe, away from the volatility of the market.
They resisted, by saying if you move it now (into cash) you will never recover what you have lost when the market goes back up.
We desperately need your advice. I trust you more than our advisor at Morgan Stanley, What should we do? With only 4 more years to my wife’s retirement?
Signed,
Desperate in Georgia !!
Terry Says
They gave you good advice if it was on one of those huge panic days. I had been trying to warn about this possibility for several months. (View the video on my website, where I’m wearing a black suit jacket!)
OK, but now that panic is over — and no one knows for sure if we have seen the bottom. We have had a bit of a bounce to over 22,000, as I write this.
So my advice is to sell at least 35% of your “equity” stock position (whether individual stocks or mutual funds) — and put it in a money market fund.
You might not make as much money back on the upside — but you won’t lose any more of that portion, either. That will let you sleep at night for the longer run with the rest of your stock portfolio. And you for sure won’t be 100% correct in this decision — but you won’t be 100% WRONG, either!
ONE MORE THING: THIS IS YOUR MONEY! You have the right to demand they follow your instructions. And they should cut their commission rate on these sales! Ask about it.
AND, I’m assuming this is in a tax-deferred IRA rollover (or in your 40l(k)) so there will be no tax consequences. Make sure of that.
