Investment Inn

If your 401k is invested in the stock market, you saw a loss in 2008. You might have sat by helplessly as your retirement savings dwindled. Your first instinct and it might still be a consideration is to get out now. You can start to pull out of your stock funds and invest in safer bets, like bonds and money markets, but is it the right idea? It all depends, but on what?

Your diversification. Most individuals mistakenly believe that 401k diversification means investing in a collection of stocks and bonds. Yes, it does, but there’s more. With stocks, you need to examine the industry. Never invest in just one, like the auto industry. Diversify your stocks so that if one industry suffers, you still have the others to fall back on.

When diversifying, consider consumer spending habits. The entire stock market took a dive in 2008 due to the poor economy.

If you’re invested in stock that might not recover as quickly as the rest, like with the auto industry, consider pulling out of those stocks, but do not remove all your stock investments. Switch to a money market account or purchase different stock. Remember though that the economy will begin to improve, it will just take time. In fact, that leads the next factor.