Within just the past month, the stock market has reached record highs, followed by record drops, and then more gains, fueled by news events including the international spread of the coronavirus, the Democratic primary, and emergency interest rate cuts from the Fed, including the most recent cut to zero.
When it comes to your retirement nest egg in a 401(k) or IRA, those market swings can be hard to stomach, let alone plan a cogent financial strategy around. Fortunately, for most investors with a retirement account, the smart moves are likely more straightforward than you'd think.
Market bumps don't necessarily mean that you need to drop everything and tinker with your 401(k) holdings. In fact, volatility is pretty normal. Daily swings in excess of 1% occur with regularity for the U.S. stock market: They happened on about 27% of trading days in the past 20 years, according to FactSet data analyzed by Grow.
If you're in your 20s, 30s, or 40s, you likely still have decades to go before you retire. And making some smart moves now, along with creating a plan for when the market gets bumpy, can help calm your nerves and set you up for retirement.
Video by Jason Armesto
As Josh Brown, CEO of investment advisory firm Ritholtz Wealth Management, put it on Twitter recently: "If you're under 60, the universe just gave you a gift this week. Use it."
Here are three moves that experts recommend you make:
"People should recognize that the stock market is a roller coaster in the short term — there's usually something" that's going to cause turbulence, Zigo says. So for most investors, it's probably best to ignore the news during a downturn, or look at it as a green light to keep investing, especially if you're on the younger side with a long way to go before retirement.
"For young people with a long time horizon, it could be a great opportunity to just keep buying," Zigo says.
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