Despite the market’s astonishing volatility and punishing losses, employees are still thinking long-term with their exchange traded funds (ETFs) and other investments. They’re remaining optimistic about their 401(k)’s continuing to make contributions.
But in the last two months, the average 401(k) plan has lost between 18 % and 30% of its value, whereas contribution rates have dropped a miniscule to 7.8% , from 8% a year ago. Additionally, the amount of 401(k)s held in equities is at 53.8%, compared to 68.1% a year ago, states Lisa Shidler of Investment News.
It is apparent that employees are still saving and investing, protecting their portfolios by educating themselves and choosing different, less risk averse, options for their 401(k)s. This is a good thing. Continuing to contribute now will only benefit investors when the market recovers.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.