With all the turmoil in the stock market lately, you may be tempted to stop contributions or adjust them from your original plan – don’t! The thoughts going through your mind are typical, especially in times of crisis, but this when you should be staying the course or even increasing your contributions. Many of the fundamentals about your investments have not changed, it’s merely the public’s perception (and reaction) that has affected the share price of many companies and it presents a great opportunity to buy.
You may not remember it but the last time we had this type of panic was back in 2001 when the dot-com bubble burst and the stock market went into a free fall. A mere five or six years later, the stock market recovered and people were speaking of prosperity as if it would never end. Five or six years is nothing in a retirement plan when your horizon is ten, twenty, or even forty years out, so you shouldn’t be at all concerned. Here are a few other reasons why you should keep investing:
401(k) employer match: If your employer matches a part of your contribution, make sure you put enough to get the maximum. That represents an automatic appreciation that puts you ahead of where you were before the contribution and something that you should always do.
Long run appreciation: It’s hard to see red on the ticker but if you consider that you won’t have access to the funds for a decade or more, you can play the waiting game until those stocks or funds turn it around.
Immediate tax benefits: Every dollar you contribute is one fewer dollar you need to pay taxes on, so you might as well contribute what you can and save it for your retirement.
We’re in a bumpy patch right now with the stock market but things will turn around, they always will. If they never turn around, the last thing you need to worry about is whether you have enough money. 🙂