From today’s Wall Street Journal:
Get this: Despite the biggest and broadest decline in financial markets in a generation, the median 401(k) retirement account at Vanguard Group on Sept. 30, 2009, was up 7% from where it was two years earlier, when the market was near its all-time high.
Continued regular savings matter a lot. If you have continued contributing to your retirement account throughout the stock-market debacleâ€”and even better, if your employer continues to match your contributionsâ€”your account probably has more in total dollars than you expected. Younger people, who have smaller balances to begin with, will see a bigger impact from their regular savings.
You can read the full article here.
In a way, continued contributions during a down market masks the losses and helps you feel better about where you are. It’s also a good strategy for making the down market work for you. You can even make it work harder for you by increasing your contributions during the down market. That’s the strategy my wife and I took during this downturn. So far it’s paying off. Our account value is about where it was at the high. Our personal rate of return for 2009 is around 30%.