28 Jul 401(k) Losing Money? [What to Do Right NOW]
After the great returns many investors saw in their 401(k)s over the last few years, 2022 started with a downturn in the stock market, and a lot of investors are seeing their 401k(s) losing money.
The market has been extremely volatile due to the raising of rates by the federal reserve, inflation, geopolitical instability, and, let’s face it, uncertainty about pretty much anything in this world.
If you’re a nervous investor, you aren’t alone. We are in uncertain times.
But, with uncertainty comes opportunity.
If you have a 401(k) losing money – before you toss in the towel and go to cash or stop funding your workplace retirement account until the market recovers – it’s critical for your financial future to watch this video for 3 tips on what you should do right now.
If you have a 401(k) losing money, here are 3 tips on what you should do right now.
#1 Remain Calm
Contrary to what you may hear in the news, rising interest rates are a good thing for our economy.
Consumers are still spending. They are traveling. They are still buying homes. They are buying new cars (if they can get them).
This isn’t the time to get out of the market.
During the last 11 Federal Reserve tightening cycles, the market has been up 10 of them.
Rember, the market has come back 100% of the time. It may take time, but it will come back.
The key is to stay in the market and not try to time the market.
#2 Don’t Throw In the Towel
In times like these, the #1 mistake we see is when the consumer “throws in the towel” and cashes out of the market.
The problem with this is that you have sold at the bottom of the market or near it.
Finance 101 teaches us to buy low and sell high. This is the time we should be adding to our long-term portfolios, not selling them.
Cashing out now may lead to longer-term regrets as the market does recover.
#3 Continue Automatic Investing
The greatest investors in the world are always looking for a sale to buy more stocks. Currently, stocks are on sale – especially some highly rated ones.
If your employer matches your contributions, you are buying even more stocks at a discount.
Check with your employer to see what your 401(k) company match is.
Let’s say they match dollar for dollar up to 3%. And if you make $50,000 per year, 3% of this is $1,500. Your employer would then match this $1500 – giving you a 100% return on your contributions.