Like many other 401(k) contributors, you may have lost a lot of money in your retirement account. You may not know when to go back to putting a portion of your salary back into accounts or related exchange traded funds (ETFs).

No matter how skeptical or unnerved by the market’s activity you are, the right time to go back to putting back some of your salary into your 401(k) plan is now. Right now. According to Walter Updegrave for CNN Money, there is no way that stopping or lowering your contributions to your 401(k) or other retirement accounts helps you. Here are a few reasons why:

  • The events of the past year argue for saving more, not less, and since many employers are trimming or eliminating the 401(k) contribution package, if you are still offered it, you should do it; 34% of employers have reduced or done away with their match and 29% plan to do so over the next 12 months.
  • Another reason to  contribute into your 401(k) is the the lucrative tax benefit of investing pre-tax dollars (and deferring taxes on gains in your account), there’s a compelling investing reason to continue funding your 401(k) and other retirement accounts now.
  • The long-term return you’ll likely earn on the money you invest after stocks have been on a long run or are at or near a peak is much lower than the return you’ll likely get when you buy after stocks have been seriously hammered, like now.
  • People are least comfortable investing in stocks when their future long-term return prospects are strongest and most comfortable buying when the outlook for future returns isn’t as strong. This is one of the ironies of investing.
  • Even if you could get around your natural reluctance to buy when stock prices are depressed, it’s still hard to know in real time when stocks are most attractively priced for future gains.
  • The point is that if you invest only when stock prices are on a roll and abstain when they’re in the dumps, you’ll be buying in only when stocks are selling at the high end of their value range and missing the bargains.

Try not to let your lost contribution money get in the way of your future investment strategy. This will help to set you up in the future.

While we’re on the subject, be sure to ask your 401(k) provider to include ETFs if they don’t already. They’re low-cost, and over time will save you money in fees, leaving more cash for you to enjoy in your golden years.

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.

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