Disclaimer: I am not a stock market or financial advisor. This is just a story even though it is a real story.

This is really a question about realized and unrealized gains in the stock market. I hope I haven’t lost you.

This a question a friend posed to me in 2008. She was over 59 1/2 so there wasn’t any early withdrawal penalty. The car cost around $20,000.

Her 401k had increased from $100,000 to $120,000 in a year. She thought she would take out the earnings and buy a car. Her husband, however, thought differently and told her to leave it in the stock market. Well the stock market started declining October 1, 2008 and she hadn’t decided what to do. People told her to wait it would rebound. It didn’t. She had to borrow for the car and her 401k went below $100,000 to $90,000. If she would have withdrew the $20,000 she would have realized the gain of $20,000. The $100,000 would have decreased but at least she would have pull out the gain and had a car with no debt.  The answer is and always will be “It depends.”

When you leave the money in, which is what you normally should do, you do not realize any gain. it’s just fun to watch it rise and dream of how you are going to spend it and when it falls you wait for it to rise again. The stock market is a tricky business and with everyone’s 401k in the stock market, everyone has become an investor with the wonderful world of Defined Contribution Plans. Ohhh I dream of the Defined Benefit days.

Shttps://seekingalpha.com/article/4127253-will-stock-market-crash-2018-video