Days of record market losses may inspire 401(k) investors to take action.
Yet most experts caution against doing just that.
The reason: Days when the markets are down tend to be closely followed by days when the market is up. If you sell and run for cover now, you may miss the upside.
“The reward doesn’t come without the risk,” said Sri Reddy, senior vice president of retirement income and solutions at Principal Financial Group.
Once you have identified a level of volatility you’re comfortable with, experts generally say you should try to stay the course even during choppy market activity.
“It’s especially important to not panic,” said Rita Assaf, vice president of retirement leadership at Fidelity Investments. “Stick to your long-term plan.”
If you’re still tempted to act, there are some moves you can make that experts say will position you for future growth.
It is important to have a healthy mix of equities and bonds.
Ideally, your diversified investment strategy will expose you to different areas of the market to help manage your overall portfolio risk, Assaf said. That includes U.S. small cap, large cap and international stocks, as well as investment grade bonds.
Because stocks have generally climbed for a prolonged period of time, it’s also important to…