In light of the recent market volatility, a new report from Fidelity Investments analyzing the performance of 401(k) balances between Oct. 1, 2008 and June 30, 2011 is quite telling — giving a testimonial to the value of sticking with the stock market even amid the worst declines.

Among those investors whose portfolios included equity funds and who made no changes during these turbulent three-and-a-half years, the average account balance rose a remarkable 50%. For those who dropped to 0% equity and who then returned to at least some equity allocation, their account balances rose 25%.

As for those nervous investors who ran for the exits from equity funds? Their accounts rose a scant 2% in that period of time.

The value of remaining with equities is perhaps best underlined by those who had equity exposure but stopped contributions. Even without those additional funds, their account balances increased 26% by June 30.

“The events of the past several weeks have forced many investors to evaluate their investment strategies, and Fidelity has responded with additional resources and educational guidance to help our 401(k) participants make informed decisions for the long term,” said James M. MacDonald, president of workplace investing at Fidelity. “Our analysis reinforces that during extreme market swings, it’s essential that investing for retirement requires a long-term view.”

In fact, in response to the recent wild market swings — and the 50% increase in call volume in the past two weeks at Fidelity — the fund giant has created a new market volatility home page,, and published an article on “Navigating Volatile Markets” on its 401(k) participants’ portal.

As for the second quarter of 2011, the average contribution was $5,790, up 11% from the average contribution in 2006. And for the ninth consecutive quarter, more people increased their contribution rates (6.1%) than decreased them (2.7%).

Fidelity also reported that the average account balance reached $72,700 by the end of the second quarter, up 19% from 2006. This was a 1.7% increase from the $71,500 10-year record high that 401(k) balances administered by Fidelity reached at the end of 2010.

This story was originally published in Money Management Executive, a Source Media publication.

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