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What Should I Do With My 401(k) Right Now?  Thumbnail

What Should I Do With My 401(k) Right Now?

The COVID-19 pandemic continues to create difficult times for us all. Not only are we worried about our health and safety, but the economic hardship from the virus has millions of individuals concerned about their financial well-being as well. A common concern for investors is the impact the recent market volatility is having on their retirement plans including 401(k)’s, 403(b)’s, and other employer sponsored plans.  Here’s what you can do to ensure your retirement plans stay on track and protected during this uncertain time.

Focus on your long term plan 

It’s easier said than done to “remain calm and stick to the plan” given the roller coaster ride of the market currently. However, one of the most important things you can do during such uncertain times is to stick to your long-term financial strategy. 

Often times when markets are volatile and you’re constantly being exposed to negative information from the media, investors either consider stopping contributions all together to their retirement plans, or changing their investment mix to be more cautious. BUT it’s important during these times to maintain your investment discipline. Meaning if you have a properly diversified portfolio, you want to continue to purchase investments and stock. Why? When we experience a bear market, historically the proceeding market has typically returned significantly higher. You can learn more about this concept in our blog: The Bear vs. Bull Market: Investment Opportunities. Maintaining your contributions to stock investments allows you to take advantage of the lower security prices. 

Consider Roth 401(k)

If your plan provides a 401k option, and you are not currently contributing to it, consider discussing this strategy with your financial advisor.  Contributions to the Roth will grow tax free, so as stock prices continue to recover from the pandemic, they will do so tax free.  This could prove to be a very beneficial long-term savings strategy.

Review your asset allocation

Now’s a crucial time to look over your asset allocation and ensure that it is properly diversified. During times like this with volatile stock markets, the importance of diversifying really comes to light and is more important than ever.  Combining different asset classes helps buffer your investment portfolio against substantial losses during extreme volatility and allows your investments to grow more efficiently.  

Although there’s no perfect method to a creating a perfectly diversified portfolio, a financial advisor can work with you to create a well-balanced portfolio to help reach your long-term financial goals. 

Investment adviser representative and registered representative of, and securities and investment advisory services offered through Voya Financial Advisors, Inc. (member SIPC). 

[Archstone Financial is not a subsidiary of nor controlled by Voya Financial Advisors.}