PROTECTING YOUR 401K Lou Mancusi
Since the Great Recession officially ended in 2009, the stock market has been on a solidly upward trajectory. While many economic indicators may seem to be heading in the right direction, it is not a question of if, but when, the next recession will occur. This is why it’s important for people to protect the assets that are in their 401(k) accounts. Here are some steps to take to make sure that these assets are protected.and is, a maker of history.
There is a temptation to sell everything when the market begins a massive decline. This is generally a bad idea. The better route to take is to continue making contributions to the account. Buying as the market goes down means that it’s possible to buy more shares of a given fund in what amount to a fire sale. When the market recovers as it has after every recession to date, these shares will appreciate in value and boost the overall value of a 401(k) account.
Keep Contributing
The key to maintaining a healthy 401(k) balance is proper diversification. This would mean that a future retiree would likely want to have their investments spread across multiple asset classes. For example, holding 15 or 20 percent of a portfolio in bonds could blunt the decline in stock prices as bonds usually perform better than stocks in a recession.
Remain Diversified
Ignore Account Balances
Endlessly staring at a 401(k) balance is a bad idea. This would lead to a temptation to sell at the bottom, which is the worst thing a would-be retiree can do. It’s fine to check on a balance periodically, but checking on an hourly basis is a really bad idea. Instead, continuing to contribute and sticking with a solid plan is a better avenue to take to build wealth over time. Those who remained in the market in 2008 and 2009 were rewarded handsomely for going against the herd.
There will always be the temptation to sell and cash in, but this is the absolute worst action to take for those who are in the accumulation stage. Those who have a plan should stick to it. They’ll be able to see their account values rise over time, which should provide for a more comfortable retirement in the long run.
Thank you! FOR MORE INFORMATION VISIT LOUMANCUSI.NET