Dos and Don’ts to avoid panic about your 401(k)
PUBLISHED TUE, MAR 10 2020 8:31 AM EDT
UPDATED TUE, MAR 10 2020 1:53 PM EDT
In the context of the recent considerable swings in the stock markets due to the coronavirus and the oil price war, this article discusses investor concerns and questions that brokerages get about the situation.
It is understandable for investors who see dramatic drops in the value of their 401(k) accounts almost overnight to wonder if they should take action. The article discusses options based on age, as possible approaches will be different for younger people than those closer to retirement.
Investment firms all cite increased phone and email activity during these periods, with investor clients concerned that they may need to do something, but they don’t know what. In most cases, the advice is to hold fast, as market swings are part of the investment world. Markets react to events, and when events correct, markets correct.
Younger investors should usually just hold tight and wait out the gyrations. Those closer to retirement often get advice about how to invest more conservatively to dampen the swings in value in troubled times. Specific advice steps are explained and include:
- Do think about when you’ll retire.
- Do check your asset allocation.
- Do review your contribution rate.
- Remember, you can’t time the market.
- Don’t make knee-jerk changes.
- Don’t take an early withdrawal.
- Don’t get distracted from your goals.
There’s more, and it’s all useful information if you have concerns about your 401(k). Read the full article here.