RALEIGH, N.C. (WNCN) – It’s been a volatile couple of days for the stock market and as the market turns bullish, some people with 401Ks are wondering just how they should react to those changes.
Financial experts say what you have to do depends a lot on your age and when you will need to take money out of the market for retirement or to fund a child’s college education.
Let’s face it, in these days of 24-hour news reports, it’s pretty confusing when you hear minute by minute updates on what the market is doing.
The frenzy from all that makes bells start going off in a lot of people’s heads.
“Oh God, it’s terrible,” says Louie Grissom of Raleigh. “I don’t know what to think of it right now – who to blame. I don’t know.”
Some are blaming the “bots” which are computers that run those automatic buy/sell programs.
“The algorithms have been let loose,” says Doug Amis who is the president of Cardinal Retirement Planning of Cary. “I would caution the retail investor not to follow the herd, especially when the head is a computer.”
In an age when algorithms are helping to drive market volatility you need to make sure you have enough cash in your portfolio to offset what’s happening.
“The rule of thumb is about 3 month’s expenses for people who are currently employed and have some safety to their position,” says Amis. “For anyone less safe—or who has just one person working—we recommend 6 months expenses.”
Many experts are calling this a “correction” and some who play the market are going with the flow.
“It’s a natural progression in the chain of events that usually result when the market has been overbought for a period of time,” says Mack McIver of Raleigh. “
McIver says he’s not worried saying, “I’ve been an investor in the past, it’s the same old thing. It’s fairly predictable.”
But, others see the barrage of media coverage and start biting their nails.
Randy Milburn is one of them.
“I have a job at an investment firm and I’m afraid they might not need me if it gets too bad,” he said.
However, those who follow the market say if you fret you regret.
“It’s all fueled by emotions right now and people need to be careful making decisions,” says Hans Scheil who is an author and Certified Financial Planner with Cardinal Retirement Planning.
Right now says Scheil, the only thing you’re losing in the market is some of the gains that were made over the last year. He says if you’re not close to retirement don’t start selling.
“I wouldn’t worry much. I’d keep monitoring it and I might even look at buying,’’ said Scheil.
And if you’re within 5 years of retirement, he says the best advice is to sit down with your financial advisor to devise a strategy because in this current market situation, there’s no one answer that will fit everyone’s needs.