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coupleWith this extremely volatile stock market that seems to be plunging every time we check the ticker, it’s no wonder why you would want to move your 401k away from it. You probably have your concerns about whether or not it’s a good idea, and more importantly, how to go about doing so.

You may be thinking something along the lines of: “Isn’t your 401k supposed to be the best way that you can save for retirement?” Well, the problem with it is that the money that you invested already has decreased in value. In some cases, the $12,000 that a person has put towards their 401k is worth only $9,500. We have all been told that the stock market is going to get better and that all of the plunging is based upon people’s fear. Well, what if it never goes up? Is the dollar amount that is in your 401k going to get smaller and smaller until there’s nothing in it when you decide to take the money out?

When looking to move your 401k away from stocks, you need to analyze why you are thinking about moving it. Is it because your stocks have experienced a significant down and you want to get out before it gets even worse? If you sell your stocks at a low price, you are actually losing a lot of money. It is best to wait it out, and then sell it. In addition, it is important to look at your age. Now, if you are just a few years from retirement, then it may be a smart idea to invest in something a little bit less risky.

A less risky investment would be along the lines of a mutual fund, real estate, or gold. That being stated, the type of asset that you can invest in your 401k is contingent upon what your employer has set up in the retirement plan. You need to discuss these options with the HR department of your employer and make sure that you have options. Most of the time, you cannot buy real estate or gold in your 401k, and it has to be set up in an IRA account.

Mutual funds are the least risky investments, and many investors have been switching to bonds versus stocks ever since the major drop in savings back in 2008. The major plunge in the market left owners of 401k’s feeling like their money was vulnerable and they didn’t want to experience anything like that again, hence switching to a much safer fund.

To save your 401k from decreasing in value, you should consider investing in bond funds. These types of assets are far less risky and volatile than the stock market. If your stock plunged, don’t sell it when it’s low! Although it is worrisome to hold onto it when it’s low, you will lose a lot of money if you sell it at that low price. Just wait it out until it becomes high again, and then sell it if you so choose.