I was recently asked by US News & World Report about what 401(k) participants should do when we experience volatility in the markets – like this past January. It made me think about what makes participants uneasy in these topsy-turvy markets. Clearly, it’s fear. Fear is at the root of our reaction to volatility – it’s the emotional reaction to a specific source of danger. Studies tell us it takes just a tenth of a second from the time you’re exposed to something you fear until you react. It’s survival instinct. It’s knee-jerk.
In volatile markets, participants experience fear. It’s at those times that we need to stress the enhanced purchasing power of your dollar in a down market, the immediate return on investment that results from an employer match – and discourage participants from reacting instinctively to fear. A key is to get participants thinking more long-term and providing them with a personalized solution to reach their goal.
Opposite reactions to fear are assurance, calmness, confidence, and trust. A personalized solution can provide all those things. To read the article ‘Keep Volatility From Hurting Your 401(k) click here: http://money.usnews.com/investing/articles/2016-03-18/keep-volatility-from-hurting-your-401-k