QUOTE (JoefromTO @ Nov 27 2008, 12:52 PM) So its safe to say that cash will be king...which suggests selling properties to liquidate..?Cash is nice. But cash sitting in a bank account is a waste of time. The money is not moving fast enough.
The best way is to generate cash flow with much higher interest than 2-3% that banks are offering.
And save some cash on the side for emergency. (6-10 months of monthly expenses put away is nice throughout recession)
I am suspecting that the US government might delay the mandatory 410K pension funds withdrawal to balance the financial market. The market has already taken a big turn before 2010 (when the first wave of retirees are supposed to start to withdraw from their pension funds); if the market hasn`t rebounded by 2010 and plus mandatory withdrawal from pension funds, then what is going to happen with the equity market?
One possible solution is this (I am no economist, but this is my take on this subject).
*Almost all employers, luckily, have switched from "defined-benefits" to "defined-contributions" pension plan. Not only are the employers NOT responsible for performance of your DC pension funds, but employees are left without many choices but invest in company sponsored mutual funds. Since pension funds are locked in until retirement age, the fresh contribution from the eco generations will continue to support the equity market, just when baby boomers continue to withdraw from the market. However, the unfortunate consequence for the eco-generation is that those who rely on company pension funds may be left without much to retire with if the younger generations cannot further support the market!!
This is one of the reasons why I am investing in my own retirement. I want to create sufficient cash flow so that I don`t have to rely on company pension funds which a) I can`t access it until age of 65 b) I have no control over since it is invested in mutual funds. I want to be able to control and be responsible for my own financial future.
Side Note:
Big, old companies (ie. GM) are loaded with "defined-benefits" pension plans that gaurantee a certain amount of retirement funds. Luckily, or unluckily, we have a socialist government that will bail out the big companies to prevent catastrophic loss.
Interesting!