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401k and todays stock market.

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    That's the nature of the stock market. It goes up. It goes down, And back again. If you are 25, you have plenty of time to ride out the current volatility. Now if you were 60 and just a few years away from retirement, i might say to transfer a portion of your stock funds to safer income or money market funds.

    But the worst thing you could do is cash out your investments now or stop regular investments. If you keep investing thru 401k contributions or dollar cost averaging, that means you can take advantage of periodic dips in the stock market and end up buying at a lower price. If you cashed out now, for instance, your losses on paper would become real losses.

    Sit tight, unless you feel that constitutionally, weathering this kind of risk is just not part of your makeup.


      I am 26 and I actually got a little miffed when the value of my shares went up because they became more expensive to buy (thus I got less for my money). Obviously I don't want to lose money year after year but I could definitely handle cheaper share prices right now.

      As to trying to have your money in a safer vehicle during a recession, I wouldn't recommend it. I did that with my first 401(k). It bled slowly but did so consistently for 3 solid years (it was still losing money when I cashed out because it had shrunk below required level and it was too small to transfer). Stocks during that time regained money, my "safe" vehicle never regained from the losses. I have learned my lesson and now am far more aggressive with my investing. The losses are bigger but so are the gains (and no one can force me to cash out my Roth IRA).