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Got Keogh? Or Got IRA?

|Includes: DIA, SPDR S&P 500 Trust ETF (SPY), UNG, USO, VXX

Our stock market is , in fact, a great wealth redistribution engine no differently than our tax code. Both works somewhat differently but remains the same as far as redistribution is concerned. You see, there is institutions, individual investors, mutual fund or pension managements and so forth.

Well, I am writing this article that focus on individual investors that have Keogh accounts or IRA accounts. I just want to share my ideas about how you can manage your retirement accounts to your own advantages depending on how you view present stock market activity on a day to day basis.

Usually, you have a portion of your regular paycheck along with contribution from your employer being set aside automatically toward your Keogh or IRA account. Usually, the weekly contribution is used to buy shares in your selected funds as offered by your account director or manager .

it is June 2014 as I write this article and the stock market is setting new highs of lately. What it means to you is that your weekly contribution is buying fewer and fewer shares as the stocks in general is climbing.

I am merely suggesting to any of you who may be somewhat at unease about the lofty prices of stocks these days and the fewer shares you are buying weekly. What you can do about it ? If I were you, I would take out the monthly or quarterly statement to find the customer service phone number or website link and contact the director or manager to ask him to stop buying additional shares . Ask him to put your weekly contribution into cash fund like money market or government fund usually known as cash reserves in your Keogh or IRA accounts. It is useful to have such cash reserves handy that you can put in. All Keogh or IRA managers offer such cash reserves account in addition to your selected stock funds or bond funds. Sometimes, you may need to ask your manager to add cash reserves fund selection to your Keogh or IRA accounts. They don't always do that so it pays to find out if you already have such cash reserves account handy .

You can leave your stock fund alone and stop buying additional shares there and start building up your cash reserves. Here is why. it is currently more likely that the stock market will suffer price corrections or even worse a stock crash due to unanticipated major political or financial disruptions like rising energy prices or health costs as a result of booming senior population that will only keep growing in the coming decade or longer. More retirees will start selling stock in order to maintain living standards that their Social Security checks probably cannot cover all.

If more of you start contributing straight to cash reserves accounts, this will help force the stock market to consolidate the more realistic values of the underlying stocks . There is no way of knowing which stock or even your selected stock or bond fund is overvalued or not. Only Wall Street institutions know themselves.

I have no way of telling or knowing when our stock market is already overvalued which usually mean that fewer and fewer shares can be bought , anyway. This is not a good time to buy these days. The laws of diminished returns is fast becoming obvious.

you can still leave your selected stock or bond funds untouched, but it no longer makes sense to keep buying shares just for sake of averaging it over the time. Unless you still believe strongly that the stock market will keep on breaking new highs for the next several years, it is now wise to stop buying shares now. Leave it as is. Start building up your dry powder keg with as much cash as possible for the next several years. In case, you are wrong about the overvaluation of the stock market, you still have your stock or bond accounts appreciate while you keep building up your cash reserves all along.

The next stock crash is utterly inevitable but I cannot pinpoint when. I can safely say that it will happen sooner or later. Once it happens, you will be thankful that you had already built up adequate cash in your selected cash reserve account with your Keogh or IRA manager that you can use to buy stocks or bonds at much lower prices later on. This is a better way to average out your retirement portfolio.

For any of you who are 40 or 45 years old or younger, you will be more forgiven as you will have extra time to heal your retirement accounts. For any of you older than 45-50, it pays to have plenty of cash set aside. However, you may want to start considering special retirement choices like mutual funds that more geared toward which year you are expected to retire. If you are expecting to retire in the year 2020 or 2025 and so forth, you can ask your director or manager to invest to such kinds of accounts like that. There, those funds usually maintain a very high level of cash reserves automatically for you because they know that the stock market goes up and down and they are trying to take advantage of lower stock prices that come along once in a while.

Just something for you to think about. I am not trying to scare you or anything. It is just that cash remains as the king always.

Some of you may think you are more savvy than me, I can only wish you a lot of good luck!