My 401(k) is getting lower and lower, and I’m struggling to contribute each month. Should I think about changing my strategy?
The best thing you can do right now is keep funding your retirement plan and be assured that your 401(k) is working for you, despite what you see on your monthly statement. For starters, each month, a small portion of your paycheck is invested in mutual funds that buy stocks -- most likely all over the world.
This means your 401(k) is helping you to buy low and sell high, which is what all great investors strive to do. You’re actually picking up shares of great companies that are still making plenty of money, but their prices have been beaten down because of the overall market. You’ll wind up owning more shares at reasonable prices than if you invested in stocks only during the good times.
401(k)s are taking full advantage of something called dollar cost averaging. This is a time-proven investment strategy in good times and bad. Over time, as the market fluctuates, your consistent investment grows while your cost basis averages out.Nestpert Pam Krueger, cohost of MoneyTrack on PBS and author of The MoneyTrack Method
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