Most people lost almost 50% of their account value in their retirement accounts. It will take 5 to 10 years for us to gain that money back if our strategy remains the same. However, we can analyze the current situation and change our strategy to boost our retirement account value.

Analyzing the Situation

1. US government is printing money to bailout failed companies.
2. US dollar rallied against all major currencies except the Japanese Yen during the Economic Crash.
3. Crude Oil went down in value because of decrease in oil demand.
4. Silver to Gold price ratio is lower than it has been in the past.

US Mutual Funds: Mutual Funds are a good way to invest and diversify your money but if you invest in US Mutual Funds, you might see your purchasing power go down even if Mutual Funds gain. This is because we are printing too much money and the surplus of dollar will result in the loss of value of the US Dollar. I recommend investing in International Mutual Funds.

International Mutual Funds: Transfer your money from US Mutual Funds to International (Foreign) Mutual Funds which have at least 80% share in Europe and Asia. Due to the economy crash, US dollar rallied and beat every currency except Japanese Yen. This means our US stocks went down 50% but foreign stocks lost about 60% to 70% of its value in US dollars since foreign currencies lost their value as compared to US dollar. However, I do not think this trend will continue, since we are printing so much money, the value of US dollar can only go down, which means you will benefit from buying foreign stocks in three ways:

1. Buying foreign stocks cheaper than the rest of the world.
2. Increase in the stock value in foreign companies.
3. The future loss of the value of US Dollar because of the surplus dollar in the market.

Personal Choice: If your retirement account allows you to signup for a brokerage account so that you can buy and sell your own stocks, then I recommend that you invest some of your retirement money in the ETF GLD and SLV. Gold and Silver rise when the economy goes down. I also recommend buying Silver as the Silver valuation compared with Gold is still lower than it has been in the past. Silver purchase also creates a hedge against currency devaluation and inflation. Gold and Silver mining stocks also rise as the demand of Gold and Silver rises. So invest in Gold mining stocks as well and also earn some dividends.

Percentage of Money Invested in each Sector (Recommendation)

US Bonds and Treasuries: 0%
US Large Cap Mutual Funds: 0%
US Mid Cap Mutual Funds: 0%
Foreign Mutual Funds: 30%
GLD: 20%
SLV: 20%
Gold Mining Stocks: 30%

If you cannot buy GLD and SLV in your retirement account, then I recommend to invest that money in foreign Mutual Funds.

This article was originally posted in April 2009, posting date is in Oct 2010 because of website upgrades and enhancements.