Commentary: Volatility has returned to U.S. stock markets with a vengeance. The Dow Jones Industrial Average has fluctuated by a thousand or more points on recent trading days. During these times your 401(k) plan participants can become very nervous. Plan sponsors and their investment advisers should help participants remain calm during these periods of intense market fluctuations by sharing the following:
- Don’t stop contributing. Participants often contact me during times when stock markets are falling so they can confirm that, … now is a good time to stop making 401(k) contributions, right Bob? Many participants wrongly believe that rising markets are good to invest in but falling markets are not. This situation presents a wonderful opportunity to discuss the merits of dollar cost averaging.
