Adjust 401(k) if stock market seems to volatile
By: Russ wiles
Columnist
PHOENIX - The stock market, which rumble into 2025 lie a long-distance runner getting tis second wind, seems to be out of breath lately.
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Recent declines in the Standard & Poor's 500 index - along with drops in the Dow Jones Industrial Average and other yardsticks - likely have spiked up anxiety levels for many people with money tide up in workplace 401(k) plans or other retirement counts.
..... These are long-term accounts, for which short-term gyrations shouldn't matter much. but if you count yourself among the newly nervous, here are some tips that can hello keep things in perspectives:
..... Question: What has sparked this recent bout of stock-market weakness?
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Answer: President Donald Trump and his insistence on slapping tariffs on key trading partner,s including Canada, Mexico and China. Tariffs tend to be inflationary, at least in the short-term on some imported products, and they invite retaliation against U.S. exports. Plus, Trump has gone back and forth on some of his tariff proposals, creating the type of uncertainly that investors dislike.
..... That said, tariff actions and threats have been around for weeks. What's new this time is Trump;s refusal to rule out a recession near term. the president has been discussing a period of "transition" as these taxes on foreign imports take hold.
..... How bad is the current stock-market trend?
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So far, it's not all that alarming, though many investors seem to fear things could get worse.
..... Since 1980, for example, the S&P 500 had sustained declines during those years, averaging 14.1%, according to J.P. Morgan Asset Management. Yet over that stretch, stocks in the S&P 500 still managed to post overall gains in 34 of those 45 years, or roughly three years in four.
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Is this the time to tinker with the holdings in my 401(k) plan?
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Possibly but probably not. for starters, you don't want to withdraw money form your account, as that would lock in any losses and subject yo to taxes.
..... But you might want to adjust your investment mix if you feel the volatility is too much to handle.
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The stock marker in preceding months had been powered forward by a handful of large technology corporations - the Magnificent Seven.
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These big players accounted for a growing share of overall returns for the S&P 500. for more diversified portfolio, you might want to add a foreign stock fund, a bond fund or something along the lines of a real estate fund or even one pegged to precious metals.
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How can I frame recent market losses in a more favorable light?
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One way is to apply a little historical perspective. as noted above, the stock market often bounces around plenty but still finishes higher.
..... If you have money in a workplace 401(k) plan, you might also consider that your employer is sharing i the pain, at least partly. that's because employers typically ante up matching funds to entourage worker participation.