Investing in your 401(k) is a crucial step towards securing your financial future. However, market volatility can sometimes cause your 401(k) balance to drop, leading to stress and uncertainty. At O1ne Mortgage, we understand the importance of making informed decisions about your investments. Here are some expert tips to help you manage your 401(k) effectively.

1. Don’t Panic

Investing for retirement is a long-term venture. While the financial markets can experience significant volatility in the short term, they tend to rise in value over the long term. Even if you’re nearing retirement age, rash decisions can make it more difficult for your portfolio to recover. Avoid making impulsive decisions about your portfolio based on fear or anxiety about the future.

2. Investigate the Reasons

Take a step back and try to understand why your 401(k) balance dropped. Look at your portfolio, then read investment news to get an idea of what’s happening and which trends or other indicators may be influencing your return. If you’re experiencing short-term fluctuations and there’s no threat of a long-term economic downturn, you may simply need to be patient as your portfolio recovers.

3. Evaluate Your Risk Tolerance

Risk tolerance is essentially the level of risk you’re willing to take with your investment portfolio. If you’re a young professional and retirement is decades away, your priority may be to accumulate as much wealth as possible. In contrast, if you’re only a few years away from retirement, your goal may be to preserve the wealth you’ve accumulated over your career. Take some time to think about your time horizon and how you feel about investment risk in general to gauge whether your investments align with your risk tolerance.

4. Look for Opportunities to Diversify

Diversifying your portfolio is one of the best ways to minimize your exposure to unnecessary risk. If you want the majority of your 401(k) funds in stocks, consider mutual funds and exchange-traded funds with stocks in a variety of sectors. Even if you have a high risk tolerance, it can still be beneficial to spread out your investments across multiple asset classes, such as stocks, bonds, and real estate.

5. Consider Financial Advising

As your retirement plan grows, it could be a good idea to consult with a financial advisor. A good financial advisor can help evaluate your 401(k) portfolio and give you some guidance based on your personal circumstances and objectives. If you have an individual retirement account or other investments, they may even be able to help you manage those portfolios. As you near retirement, an advisor can also help you ensure that you’re preserving as much wealth as possible, so you can stay on track with your goals.

The Bottom Line

Watching your 401(k) balance go down can be a stressful experience. To avoid making matters worse, it’s crucial that you take the time to assess the situation, evaluate your portfolio and investment strategy, and take steps to reduce unnecessary risk. If you’re overwhelmed or want to make sure you’re on the right path, consider working with a financial advisor to get objective, personalized advice for your situation and goals.

At O1ne Mortgage, we are committed to helping you achieve your financial goals. For any mortgage service needs, call us at 213-732-3074. Our team of experts is here to provide you with the best advice and support to ensure a secure financial future.