How to Protect Your 401(k) in the Event of a Market Crash

Understand risk

When stock market prices fall more than 10% it can have a devastating effect on your 401(k) portfolio. And while your personal risk is determined by your specific investment choices, the average person stands to lose 14% of their overall savings during such a fluctuation.

While this kind of loss is sizeable it is not impossible to recoup the loss over time. However, for those closer to retirement age, it’s essential to invest in low-risk stocks and mutual funds in order to avoid significant losses. It’s also important to note that when the stock market crashes, often the long-term bond market maintains or experiences growth.

While bonds are likely to become a more risky investment than in recent years, having a portfolio that incorporates bonds can stabilize your investment portfolio.

Finally, in addition to focusing on investments with minimal risk investors should also have other forms of savings, such as a traditional savings account or reverse mortgage to offset potential losses.

Small-cap winners galore

The big stock market winners share one common attribute: Near the beginning of the ascent of their shares, the companies offer revolutionary products or services, are market leaders in their respective industries, or both. Some big stock market winners that possessed the attributes outlined above are Netflix (NFLX), which we recommended to investors in October 2002; Intuitive Surgical (ISRG), which we bought and recommended in July 2004; (BIDU), which we bought and recommended in August 2006; and MercadoLibre (MELI), which we recommended to investors in October 2010. Get up-to-date small-cap stock picks from David Frazier, editor of Small-Cap Profit Confidential.
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Smarter cryptocurrency investments

The stock market crash of 2008 was the catalyst for his journey into alternatives. And interestingly, it was the impetus behind the creation of Bitcoin and the blockchain technology behind it. Keene Little wasn’t ready to risk his money yet but he was very curious, so he began charting Bitcoin’s technical patterns. What finally convinced him to dip a toe into digital currencies was seeing that they followed familiar price patterns that could be analyzed and successfully acted on. Now he shares those insights with subscribers to the Crypto Wealth Protocol.
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