How to Approach Your 401k Following Monday's Market Selloff

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Wondering about how you should approach your 401k?

Robert Powell, editor-in-chief of Retirement Daily, joined TheStreet to discuss what investors should do now.

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Full Transcript:

 Katherine Ross: The S&P 500, the Dow and the NASDAQ are all plummeting in intraday trading on Monday. This followed a very tumultuous week of trading last week, which may have had many investors or simply people with 401ks wondering what they should do next. Well, luckily for you, I've got Robert Powell, Editor-in-chief at Retirement Daily to join us to answer just some of these questions.

Katherine Ross: Bob, I asked you last week if I should look at my 401k and you said yes, but what about now?

Robert Powell: I think you should still look at it and you should still do the same thing that I said last week, which is to review your portfolio, to review your investment policy statement and to resist the urge to start selling into this panic. What I think I would do though is, if I'm a young investor in my twenties, I would reevaluate what this means to me, which is I'm now dollar-cost averaging at a lower price and if I have 40 years before I retire and then 30 years of retirement, that's a 70-year time horizon. So you'll look back at this as people did back in 1929 or 1987 as a blip, a blip in which you were able to buy stocks at a much lower price.

Katherine Ross: We saw the Dow plummet as much as 8% today. So what's your key piece of advice for anyone watching these markets plummet?

Robert Powell: Well, I think, as I said last week, it's unlikely that you're 100% in stocks. It's more likely that you have a portfolio where you have a mix of stocks and bonds. And if that's the case, you're not down as much as someone who is 100% invested in stocks. So, that's part of your saving grace right there. The other thing I think I would recommend is as you think about your 60/40 portfolio, is where are some opportunities to invest in things that are beaten down where they might rebound because they are beaten down. And that could be airline stocks, it could be cruise ships, it could be a number of companies and industries. And this might be a time to think tactically about your longterm investments.

Katherine Ross: Bob, thanks so much for joining us today.  

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