I'm worried about the market and concerned I'll do the wrong thing
Look at it this way. On March 9th, 2009 - the peak of the financial crisis - the S&P 500 (a compilation of 500 of the biggest American companies) was at 676.53. If you invested $100,000 on that bleak day, what would it be worth five years later?
On March 9th, 2015, the S&P was at 2,079.43. Five years later your investment would have tripled and would be worth over $300,000.
Past performance is no guarantee of future results, but try to look at market downturns as an opportunity to buy on the cheap. Remember, this is your retirement account and you don’t need the money anytime soon.
It’s also worth keeping in mind that Dream Forward only offers diversified mutual funds funds and ETFs. You’re not putting your retirement future in the hands of one single company - you’re investing in broad indexes, like the S&P 500. While these broad indexes go up and down in the short term, they do very well in the long term.
Unless you’re less than five years away from retirement, you can ride out the market’s short-term ups and downs and grow your money in the long-term.
If you’re a little confused about some of these terms, check out our Investing For Beginners page.
Don't cash out!
Whatever you do, don’t cash out your 401(k) account during a downturn! You’ll have to pay a special 10% income tax penalty, on top of federal and state income taxes. So if you were withdrawing $200,000, and your Federal tax rate is 15%, and your state income tax rate is 5%, you would pay $60,000 in taxes.
There are some exceptions to the tax penalty, but it’s unlikely you’ll get it.
New game coming soon
Still nervous about the stock market? Stay tuned. We’ll be revealing our new stock market roller coaster ride game soon.
Have a topic you want us to cover? Want a better 401(k) for your business?