How to Manage Your 401(k) Through Market Down Swings

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Reaching your long term goals requires a long term strategy. Treat your retirement funds like your own personal pension fund, which it is. Getting caught up the emotions of the day will prevent you from retiring when you choose to. Your retirement plan is not ‘fun’ money its there for your future.

We all remember the big recession in late 2008 and 2009 that took a big bite at the time from our retirement savings.  According to data compiled by the Employee Benefits Research Institute (EBRI) for The Associated Press, 64 percent of middle-agedlong-term workers had more money in their accounts as of August 8th than at the height of the market in 2007 (pre-recession).  At the beginning of July before the recent declines, at least 80 percent of that group had more money than they did in 2007.It’s why regular investing combined with a diversified portfolio of stocks, bonds and cash are essential for your retirement accounts.  It’s a very good thing that most 401(k) plans are built on diversified portfolios.  While the S&P 500 (a good benchmark or the US stock market) declined by 15% from June 30th to August 7th, 401(k) accounts measured by EBRI were not down nearly as much, ranging from 6.6% and 9.5% lower.

Stay the course as best you can and as global and economic environments change for the better over time, you will be in position to reap those rewards.

There is no better advice than to continue contributing to a globally diversified portfolio.

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