Summary: All right, now let me get to some of your questions. By the way, thank you so much for all of these great questions. I’ve combined them in terms of topic to make things a little bit easier to answer everyone as efficiently as possible. So, here are the answers, in general, to these questions. Of course, I don’t know your particular personal situation, so these answers are generic.<br> 401(k) Contributions And Portfolio Allocations<br> Q: Mercedes says she currently contributes 15% of her paycheck to her 401k and asks if she should lower her contributions. She’s lost $30,000 so far, as of the writing of this question, and she’s planning on retiring in 17 years. And Lorraine asked me about rebalancing her 401k and Harving just says, “401k?”<br> A: Unless you’re retiring within the next three years, you should be rebalancing your 401k and increasing your allocation to stocks. Mercedes, you should not lower your 15% deduction from your paycheck. I mean, if you have a steady job and you’re not afraid of losing it, and you have excess money in the form of an emergency fund, keep the 15% deduction. Keep plowing that money into the plan. Lowering your deduction is a classic mistake. Do not do that. You have 17 years until you’ll need the money.<br> Q: Anne wants to know about rebalancing a portfolio and the frequency of doing so. And Jill asked, “Should I be buying now? Should I be changing my asset allocation?”<br> A: As far as rebalancing, everybody should be rebalancing now, getting back to whatever the rebalance percentage was—60/40, 80/20—get back to that now because it’ll force you to buy stocks at lower prices. And this is all advice with the idea that you’re thinking long-term with this money. This has nothing to do with short-term money that you might need. That money does not belong in the stock market, it belongs in CDs, money markets, things that hardly yield anything but that are there for a specific purpose.<br> Possible Negative Interest Rates And Bonds<br> Q: Robert asks the question, “Please cover negative interest rates for treasury bills, notes, and bonds. How to make money in Treasury securities if interest rates go negative.”<br> A: Well, Robert, it’s an esoteric question, but the answer is easy. If you buy bonds, you buy Treasury bonds especially, they will do extremely well if rates go negative.<br> Social Security And Annuities<br> Q: Talibah asks, “Am I at risk for income loss with retirement funds coming from Social Security?” Or, she went on, from her FRS, which is a pension plan with the state and a medical annuity.<br> A: Talibah, Social Security will not be in danger. Generally, immediate annuities are very safe. And your pension plan should send you an annual report where you can check to see if they’re adequately funded.<br> Q: Karen asks about annuities, fixed annuities, variable annuities: “Do you think that this is a good economic climate to invest in those, especially with interest rates falling?”<br> A: My personal opinion is that investing in fixed annuities now would be a mistake. Rates are just too low, but I also want to make another point, and I have seen this time and time again. When markets get bad, insurance companies start to advertise, promoting safe investments. Buying “safe investments” right now is like closing the barn door after the horse has left the barn. It’s too late.<br> If you want safety, you would do it when the markets are up very, very, very high, and then you can look for something safe. But right now, you have to ride through this and not get sucked into this idea that you’ve had this terrible decline and now you’re going to sell everything and lock into low rates. It’s a way of selling low. And then in terms of buying the annuity, you’re buying high with the annuity.<br>
