U.S. News

Don't Let Wild Markets Upset Your 401(k)

By CNBC.com

Big moves in the markets can mean big changes in your 401(k), even if you don't do anything.  Most financial advisors will tell you not to try to "time" the stock market in your retirement account. But if you just "set-it and forget it," your 401(k) can makes moves on its own.  For example, when the stock market surges, your retirement portfolio can wind up with a larger proportion of equities than you planned for and expose you to an uncomfortably high level of risk.

401(k) Strategies for Tough Times

In this CNBC.com web-only Reporter's Notebook conversation with Managing Editor Tyler Mathisen, our Personal Finance Correspondent Sharon Epperson recommends that you check the balance of your 401(k)'s holdings, something that should be done periodically even when Wall Street isn't riding a roller coaster. So, if you had previously decided to have 65% of your 401(k) in stocks and 35% in bonds, based on your goals and risk tolernance, you should look to see if that's what you have now. Sharon notes that some retirement plans feature automatic rebalancing.

Playing Volatility

The recent market slide has many investors worried about their 401k. Barry Glassman, Senior Vice President of Cassady & Company and Scott Revare, CEO of Smart401K.com, joined Erin Burnett on "Street Signs" with their suggestions on what to do.

Glassman says it’s okay to “set it and forget it” as long as you set up certain features.

Most people do their research when they first start and they have the smallest amount of money at risk and don’t revisit as the market hits new highs and they have more money”, said Glassman.

He recommends setting up quarterly rebalancing. “If you’re going to set it and forget it, then set it up with a feature that brings your risk back in line with what you thought was appropriate originally”.

“It is very important even though you’re invested for the long-term in your 401K, to make sure that you pay attention”, said Revare. “Make sure you are invested in all parts of the market. If you’re invested in both value and growth stocks, both large-cap and small-cap, domestic and equity, and you have coverage to fit your risk tolerance between fixed income and equities, you’re going to participate in the market as it goes up over time".