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I have a question regarding my new retirement account, and since I'm not very competent in financial matters, I couldn't get a clear answer from the OP. I'm 25 and just started a new job. This job will only last 1 year. I am required to put about 6% of my monthly income into a TIAA-CREF account. There were several different TIAA-CREF account options, ranging from high ratio of % equities/non-equities to low ratio. From what I understood, a high ratio of equities to non-equities is ideal for long-term investments, and since I'm only 25, that would seem to make the most sense. The plans were simplified to being classified as to what year you would be retiring, so I went with the highest ratio of equities to non-equities. However, after I stop working at this job in a year, I plan on closing the account and taking the money out, as I will need it for various things (I'm getting married, moving back to New England). However, with the way the market is right now, I'm thinking a portfolio that is only meant to last 1 year should not rely so heavily of equities right now. Am I correct in thinking that? Therefore, I have been considering switching my TIAA-CREF account type to the one in which the ratio of equities to non-equities is the lowest, so that the money I'm putting into this retirement account (and is being matched by my employer) does not fluctuate, because I feel that the risk of it fluctuating downwards far outweighs any short-term gains I may have gotten if the market weren't so shaky right now. Let me say that I know fully well I should just keep this money in a retirement account and not touch it, but unfortunately I don't have any savings and I won't be able to save much in one year to cover the expenses relating to a wedding and moving from Arkansas to Massachusetts. Any left-over money will go right back into an investment portfolio. I also realize that there are early withdrawal penalties involved. I would just like to know if switching from a retirement account with high % equities / low % non-equities to high % non-equities / low % equities would be in my best interest with the way the economy is right now if I plan on closing this account in one year.
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Sep 15, 2008 19:49
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| # ¿ May 4, 2024 09:52 |
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Unormal posted:If you need the money in a year or less, it dosen't matter if the market is good or bad, it should have 0% exposure to equities. I'm not sure I understand the reasoning behind this. As far as I understood it, the percentage of my income directed towards this retirement account is immediately allocated into various funds and exposed to the market. I will try to alter my account so that the majority is in money markets, but I'm not entirely sure yet just how much control I'll have over the distribution without changing the type of the account it is.
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Sep 15, 2008 21:12
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