If you haven’t checked your online 401(k) account after the Brexit vote, you probably should consider a status check. Headlines have been all over the news saying that stocks around the world are experiencing sell-off because of the Brexit. The Brexit wasn’t a good thing for investors, and it definitely scared a lot of them. If you have a high allocation of stocks overseas, it’s especially scary.
However, some financial experts are saying not to worry about your 401(k). 401(k) s are supposed to be used for long-term savings. What does that mean? You have time to build your account back up if you experienced a hit. People are wondering how the Brexit affects long-term allocations. They’re not really wondering about shifts in their portfolio investments.
It’s not a good idea to make changes to your portfolio because of the Brexit, especially short-term changes. Most people tend to rid out the volatility. That’s the point of having a 401(k) because you add to the account throughout the year from your paycheck. Because of this, you’re investing on both good and bad days in the market.
While you shouldn’t worry necessarily, watch for decreases in the stocks and stock markets for up to six months. This is similar to past instances of volatility. The market is expected to go back up eventually, though. If you’re not close to retirement, now is a good time to remind you to stay diverse when it comes to investing in your retirement. However, if you are in or near retirement, principal protection is critical to not outliving your savings. Consult a retirement phase expert to create a financial plan that will meet or exceed your goals.