Don’t Let Your 401K Statement Scare You

Halloween is just around the corner, but for many of us our 401K stock market investments have been more of a trick than a treat lately.  Yes, stock markets around the world have experienced big losses over the last several months and unless your 401K was entirely invested in money market funds your balance has declined recently.

 

But, now is the time to be brave and live by the expression, “Buy in Fear, Sell in Greed”.  Unless you are already retired, you should focus on long term investing.  Now is a great time to stay in the stock market or to move more of your fixed income (bond and money market) money to the stock market by reallocating your 401K investments.  DON’T change your allocation to a lower % of stocks, because then your paper loss will become a real loss.   Even the smartest financial experts can not and will not try to predict whether the stock market will continue to go down in the short term, but most agree that the market will go back up…it’s just a matter of time.  Definitely DON’T withdraw your money from your 401K, because even if you have losses you will have to pay income taxes and tax penalties on that money.

 

Garrett Jay, is a Money Coach and Founder of Money Lessons for Life.  Money Lessons for Life teaches children, teens and adults about money with School Assemblies, Classroom Workshops, Money Field Trips, DVDs and Individual Money Coaching.