When I worked at Fidelity Investments, I was on the 401(k) side of their business, serving institutional clients such as Fortune 500 companies and their plan participants. When the stock market moved, whether it dipped or jumped, the phones would light up, and I’d talk with participants about their portfolio. Without fail, when the market was up, they were buyers; when it fell, they were sellers. It’s much like the money flow in the stock market. When stocks are up, money comes in; when it’s down, money goes out.
For some investors, it’s simply impossible to stick with a plan. They don’t have the emotional makeup to hang in there when the market is down, and they get greedy when it’s up. And yet, even if a balanced plan would help by smoothing out the ups and downs, they’re too fearful during the dips and greedy during the ups.
Investing in a 401(k) doesn’t need to be as daunting as it’s made out to be. One of the major problems I’ve come across in reviewing plans by other investment companies is their lack of good investing options. It doesn’t have to be this way.
If you’re in a 401(k), make sure you have the option to invest in a solid balanced fund or short-term bonds, dividend-paying stocks, and maybe a little gold. If you don’t have these, then it’s time for some change. If you can, I suggest you do an IRA rollover to Fidelity or Vanguard. Unless you are able to craft a plan you’re comfortable with, you’ll always be uneasy. Get a plan in place and get the peace of mind you so richly deserve.
E.J. Smith - Your Survival Guy
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