3 Ways to Help Your 401(k) Survive a Recession
With news about a potential recession dominating the headlines, you may be worried about how it may affect your 401(k). And if you take a look at that account now, you may notice that your balance has taken a nasty hit. Unfortunately, we're still recovering from a bear market -- a period when the stock market drops by 20% or more from a previous high. But don't fret. You can take the following three steps to protect your retirement savings from a recession.
As the market drops, your first instinct may be to sell off your stocks before they dip any lower. But that's rarely a good move. Markets recover, and if you sell your retirement plan stocks now, you could miss out on the gains and compounding interest that recovery can bring.
In fact, the last recession -- was triggered at the onset of the COVID-19 pandemic in 2020 -- ended with the S&P 500, a common benchmark for overall stock market performance, peaking at a record high four months later. It fell 34% between Feb. 19 and March 23, then gained more than 50%.
Source Fool.com
