[Rebecca]

I opened in 2020, have maxed it out all 4 years I could. It just keeps going down. I have it with Schwab and it’s automatic, and I’m on “risky” but its hard to see it consistently lose.

[Josh]

Wow, there’s a lot of noise in these responses. Let’s clear up some stuff. And provide some reasons/explanations for what you’re seeing.

So first of all, a Roth IRA or a 401k is not an investment, it’s a bucket that you can hold your investments in. What you need to find out is what’s inside that bucket.

Risky can be fine, depending on your age, and if it’s an acceptable risk. Generally, a lot of funds you should in your Roth/401k type accounts should be target retirement funds, S&P 500, and/or standard blue chip ETFs (With some diversity, but if these names don’t make sense don’t worry about it, that’s just to stop other people from chiming in with complicated stuff)

Now the market is volatile. The returns that people suggest are over 10, 20, and even 30 years to see an average of the 7-10% that the market has done for over a hundred years. Some years that can be up 30, and then down 20, but over the long term of averages you do climb upwards.

The issue is that it’s been a weird journey since 2020. During the pandemic everything went way down, and then way back up. So, depending on when you bought in you either caught the wave or just missed some of the gains that year.

Let’s say you invested $1000 Jan 1, 2021….

2021 was actually a good year, the S&P 500 which a lot of investments follow went up 28.7% But 2022 was a rough year and stocks went down -18.1%

So, it would have gone up to $1287 Dec 31 2021 And then at the end of 2022 it would be back down to $1054 Dec 31 2022

This is normal, notice that it did trend upwards. Generally over 10 years the stock market has about 7 years where things grow and about 2-3 years where things go down, which is why it’s such a long game.

That being said, one of things you want to check is are the investments you’re invested in these funds designed for a long term game. Cause some people want to take more risk, or really believe in certain companies and may buy a very specific thing, that gives a chance to go big, but also misses out on the gains the market does.

See what actually happens is the reason the market moves up 7-10% every year on average is that the S&P 500 is a bucket of companies, and sometimes one of those companies does really really really well. Like people who have just that one stock get 10x their money, but picking these stocks without a crystal ball is almost impossible.

So what people do is they buy a big collection of stocks that have a good chance, and by the law of averages, you’ll hit almost every single year and a little bit of your money will make a whole lot and provide you a good return. That’s what the S&P 500 does, it picks the best 500 companies most likely to make a return.

2023 started off really well, but because of everything going on in congress investors are scared leaving them to want to sell and lowering prices on stocks. People are also excited about bonds because instead of getting 7-10% and having a huge risk and having to wait for a while, they can guarantee 5-6% returns each year. It might sound nice, but a retirement account has the time to wait to make more money, and for those people it means we can buy cheaper, and wait until they go up.

So it’s probably fine, but you should share with us what you’re invested in.

Or your best bet if you’re worried is to talk to a financial professional, as we’re all a bunch of random people on Facebook, that don’t know anything about you or your financial situation

[Ben]

Are you retiring now? If not, you shouldn’t care about it declining.

Overtime, the market goes up. Just wait.

[Santiago]

The market is not that far off from all time highs.

I wonder if you are simply not reading your statements correctly.

It would be difficult to not be green if you started Investing in 2020.

Don’t miss: Roth IRA- no age limit to contribute

[Sean]

What do the have you invested in? Because the market is massively up since 2020.

[Robert]

What is it invested in? My entire 401k is in a fund that mimics the S&P 500….. it has been since 1993….and most quarters and years i barely glance at the account statements.

I’ve lived through three market crashes, and a number of market booms. When investing for retirement, you have to reset your mind to think not in terms of years, but decades.

[Amy]

Unrealized losses. So basically, unless you are retiring in the next 3 years, you haven’t lost anything, and you should have it in an index fund. If your Roth shot up in value over the last 3 years you wouldn’t have gained anything either because it’s unrealized until you cash it out.

So, unless you are close to retirement, just keep on maxing it out and not looking at the market.

Also, check out: I have FBIOX in my Roth IRA – SO..

[Jia]

Mines went up but my Roth is all in FBGRX. I do brokerage with FZROX and that one didn’t make money yet.

[Author]

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