What to Do With Your Retirement Plan in a Volatile Market

Feeling confused by what’s happening to the investments in your retirement plan? You’re not alone.

Uncertainty and volatility are abundant in the stock market these days, leaving many investors unsure of the future.

While you can’t control the market, there are at least two things you can control:

1. Your actions. Don’t let fear of the market be your only guide; consider staying invested. You’re in this for the long haul --­ and historically the American economy has shown to be pretty resilient.
2. The makeup of your retirement portfolio. You determine how to spread your investments over which investment options.

Keep your investments diversified

When it comes to the composition of your retirement plan portfolio, make sure it’s diversified.

Spreading your wealth across a variety of investments is key in helping address risk. You’re seeing that market conditions change over time -- and how some investments in your portfolio will outperform others.

Diversification happens on two levels:

• First is the asset allocation. That's when you spread your money over the three major asset classes: stocks, bonds and cash equivalents.
• Second is spreading your money over various investment options within a particular asset class. This is how diversification helps you balance the risks and rewards of the asset classes and the investment within the asset class itself.

You may better ride out market downs

With a diversified mix of investments, you may be better able to ride out the downs of economic cycles and limit the risk to your retirement plan portfolio while seeking the growth you want.

Diversification is an investment strategy. It doesn’t assure a profit or guarantee against loss in a declining market. Investing involves market risk, including the possible loss of principal.

What to do next

Learn more about these and other financial issues on the Investments Resource Center. Or talk with your employer, retirement plan administrator or investment professional.

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