MONEY HACKS: Should I Put Money into My Investments During a Market Correction?

Over the last several weeks, we’ve started to experience a market downturn or market correction. While the markets have stayed strong throughout 2020 and 2021, this type of correction period is normal and does occur from time to time; in fact, we have been overdue for a market reversal. Nonetheless, it is still uncomfortable when you see your account and investments going down over the course of a few weeks. In this Money Hacks episode, Alex talks about different actions you can take as a 401(k) investor during market volatility. Let us know if you have any questions or if you’d like to discuss your investment risk/strategies.

Resources:

• The Power of Healthy Stock Market Corrections
• Should I Stay Invested During a Pandemic?
• Market Volatility: 5 Steps for Managing Your Long-Term Investments
  

Any money questions you’d like answered? Our Money Hacks series is created from conversations we have with employees, investors, savers, and all people planning for their financial futures. What topics are on your mind for our next episode? Email us here!

Video Transcript:

Hey, this is Alex Assaley, it's episode number 87 of Money Hacks, and it's just our first video of the year as we've been busy strategically planning for how to best serve companies and organizations and their employees when it comes to their 401(k), 403(b), and other retirement plans. And one of the questions we were getting a lot and we were planning to do a video on was: should I be investing, should I be putting money into investments when the market is hitting all-time highs? But in the last three weeks, I started to see a pretty significant market downturn or even market correction.

Now we've been long overdue to see a market correction, but nonetheless, it still feels painful and unsettling when you see your account, your investments going down over the course of a few weeks. And now, including today, as we're about three weeks into the year, the S&P 500 index is down over 8.5%. Small-cap mid-cap investments are down 9-10% or more in some individual stocks that are going up a lot over the last few years have declined significantly.

So, what should you do as investors as 401(k) savers? It really depends on a number of factors, but as we tell everybody, the focus should really be on your individual financial goals and your time horizon. So, if you have 5, 10, 20, 25 years until you're going to use the money, you're saving your 401(k), your IRA, or other investment accounts. If you have the right investment mix, you might not need to take any action. It can still be painful looking at the market go down, looking at your account value, go down. We only like to see it go up, but we know the market will experience ups and downs over time, and if this money you're going to use in a shorter time period, less than five years, less than three years. You really want to make sure that you're very comfortable investing it and taking on risks. And if not, it may be most appropriate to have it in some type of safer vehicle. But at the end of the day, we want you to not worry too much about the emotions of the day-to-day in the market and think about your time horizon and focus on having a globally diversified portfolio. And for most retirement plan investors, if you're in some type of do-it-for-me, target-date fund, managed account strategy, or other asset allocation strategy, you may be in a mix that while your account will still go down when we see a market correction is the right allocation for your age, your time horizon, and your risk profile.

So certainly, if you have questions, if you have concerns, feel free to reach out to our team. And if there's anything we can do to help, we certainly will. But these types of market corrections or downturns are normal, and we haven't seen one in quite some time. And sometimes investors forget how great of a period we've seen through 2020 and 2021, let alone the last 8, 9, 10 years. We could see the markets go down even further from here, and it's impossible to predict the direction or the velocity of the ups and downs of the markets. And that's why we want to control the factors that we can't control, how we're investing, how we're adding to our investments, and building an allocation that aligns with your unique, your individual financial goals. I hope this helps, and we'll see you next time.