Why You Should Always Be Ready for a Market Sell-Off

February 23, 2017 — 2 Comments


Why You Should Always Be Ready for a Big, Scary Stock Market Sell-Off

Here’s how I normally deal with sell-offs:

1) I don’t look at the 401(K) balance. It’s not going to do me any good to do so because it’s not going to change our strategy.

2) I think of all the additional shares we are going to be able to buy at lower prices. Think of the sell-off as a giant SALE!!!!

3) I increase the contribution amount if possible. We are contributing the maximum now, so we won’t be able to do that.

2 responses to Why You Should Always Be Ready for a Market Sell-Off

  1. In regards to maxing out the 401k, where are you going next? I’m think of maxing out Traditional-IRA for the wife — then after that changing her contributions over to Roth (couple of years down the road).

  2. Seems to me if you have a good asset allocation plan then you don’t need to make many (any?) adjustments during a downturn. I have seen too many people that go to cash or near cash investments after market tanks, which locks in their losses after the market starts to recover. Ride it out and don’t look at the news reports.

    In answer to BG’s comment above, what my wife and I have done after we retired and couldn’t contribute to IRA/401k, is to maximize our contributions to our HSA accounts. That will only work until you sign up for Medicare, however. With any luck, whatever replaces the ACA will be more friendly to HSA’s. Something to hope for.

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