401(k) Investors Should Stick with Equities During Market Volatility

The recent market volatility drove a record number of people to seek guidance from Fidelity Investments about the impact of market changes on their account balance and steps they should consider.

In early January, Fidelity responded to six million customer contacts in a single day, one of the busiest days on record.

Trying to move in and out of the market can hurt an investor’s long-term retirement savings, Fidelity says. The firm examined 401(k) investor behavior between 2008 and 2015, and compared people who continued to invest in equities during this period with those who dropped to 0% equity in their 401(k). Assuming the investors started with a balance of $10,000, the analysis showed that investors who went to zero equities saw their 401(k) balances grow by 74% to $17,360, while those who kept a portion of stocks in their 401(k) saw their balance grow almost 150% to $24,800.

“Today’s retirement savers have constant access to detailed market and financial data, which can be unnerving during periods of economic uncertainty and make many investors feel like they have to take action,” says Doug Fisher, senior vice president, Fidelity Investments. “While we understand that it may be tempting to react to recent market volatility, Fidelity’s guidance is to focus on a sound, long-term retirement savings plan. The market will have many peaks and valleys, so having a plan and staying on course puts you in the best position to achieve your financial goals.”