If the dollar looses its place as the world's reserve currancy is it still a good idea to invest in a 401K?

Question

My employer has just announced they will match 1/2 of employees' 401K investment. But now it seems oil-producing countries as a whole have started reducing their dollar reserves, most notably Iran. If this trend continues along with the corresponding dollar devaluation is it still a good idea to invest in this plan considering it will be over a decade before I can withdraw any money without a penalty? Does anyone have a better suggestion for investment?

Answer 1

Yes. Especially if your employer is matching 1/2, that's a guaranteed 50% return on your investment. The value of the dollar as it relates to different currencies does not really matter for a 401k to be beneficial.

You seem to be looking at a doomsday scenario where the dollar becomes virtually worthless. If that happens the entire US economy would tank, and we would take several other countries down with us, and we would all be living in a 'Mad Max' type world.

Having said that, you need to check the details. Most employers only match up to a certain percentage or dollar value. My current company matches 25% on up to 4%.

Meaning if I contribute up to 4% of my pay, they will match that DOLLAR total with an additional 25%. Say my 4% amounts to $2,000, 25% of that would be $500, so my company would give me an additional 500 dollars. I can contribute more than 4, but they will only match on the first 4.

Also, you need to find out your investment options in the 401K, Vanguard, and Fidelity are 2 of the larger 401k managers, but there are thousands of them, and every 401k will offer different investment options.

If your worried about the currency markets effecting your return, you may only want to invest in domestic companies, bonds, or just a money market. Either way, you should not turn down the free money you company is offering.

Answer 2

401K plans should be the major part of your retirement planning. You get tax breaks as well as the matching contribution.

I assume you live in the US. Whether or not OPEC prices oil in dollars or Euros makes little difference as a practical matter since you will have to have and use dollars to live in this country.

The US economy is the biggest and - at least right now - the most robust economy in the world. I think that will remain true for the rest of our lifetimes.

Invest in diversified mutual funds and if you have the option, put 10% or so in a gold fund. The long term growth rate of the US stock market has been around 10% a year compounded and gold usually holds it value as the dollar depreciates.

Worry about your own future not the long term depreciation of the dollar. Don't forget they have inflation in Europe as well, and the Euro will depreciate - maybe even faster than the dollar.

Answer 3

I don't think that you have to worry at least in near future, as the oil producer N1 - Saudi Arabia is still using the dollar thing and being a rival of Iran it will do the opposite. The thing is that the dollar will devalue for sure starting abt 6.5% next year according to WF, Its a problem for both me and you. And what makes it worse that Russia stopped using dollar as a reserve which cuts us for abt 2-3 bln dollars a year. so what i suggest is using a currency mix for time being especially EURO as its going strong, or watch for two years to be sure to see results as its still blurry now.

Answer 4

Is this post a recent question or was it made back in 1979?

Looking back to 1979 and answering this question, I think it is safe to say that things will work out and the US economy will continue to grow, even though there's some terrible political risk in the Middle East. I hope our hostages get released real soon and maybe oil prices will drop a bit too.

Answering it today, I'd probably have to go with the same answer as above (less the comments about the hostages).

Answer 5

Real money has been gold and silver for the last 5,000 years. As the US dollar declines in value, people, investors and nations flee to the strongest currencies such as the Swiss Franc and Euro.

Central banks and people also began to buy gold and silver as a hedge against the decline of the dollar. Gold and silver rise dramatically in price as the demand increased and everyone sell dollars.

Smart money have already made the move into gold and silver. Billionaires have already began to protect their assets from the coming dollar devaluation by buying gold and silver.

It is the average American that is totally ignorant of what is happening with the American dollar. It has already declined over 30% as compared to the Euro in the last four years.

Americans, regardless of your occupation, if they want to preserve their wealth and protect their family from the ravishes of poverty, they must obtained a knowledge of gold silver investments, while these metals are relatively cheap.

In the end we all have to make this decision for ourselves.

Answer 6

If it takes position the end result will otherwise be in accordance with what overseas money if any replaces it; I say if any because it could be feasible that a sparkling time-honored overseas money may be designed yet that could be perplexing so the different element may be to make it gold depending and that ought to reason some significant inflation looking on the futures trading there. today i imagine it is customarily communicate with lower the US spending/deficit which China and others have already expressed issue about. one among those waut and observe what takes position then what the end result will be.