The recent trade wars have created quite a stir on Wall Street, and some investors are wondering what their next steps should be.
One of those investors is a husband who posted in the Investing subreddit. He’s seeking advice after his wife’s 401(k) lost $12,000 from the market’s reaction to tariffs.
“Should we trust the 401(k) management to make the right moves?” the husband asked the community.
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Redditors were quick to comment on the post. Some people offered encouragement, while others scrutinized the husband’s desire to retire in five to 10 years.
Many commenters encouraged the husband to remain patient and wait for the market to recover.
“The most important thing is to not panic and make rash decisions. While this is quite scary, I’m not making any changes,” one commenter responded. However, that commenter noticed that they have a 25-year timeframe before it’s time for them to retire.
“Leave it alone! It will rebound. Go on about your way and your day, and don’t think about it,” another commenter suggested.
The stock market has endured many corrections and crashes. It’s returned to all-time highs each time. While it’s difficult to remain patient during tough times, many investors endured tariffs in 2018. Stocks didn’t do well that year but proceeded to rebound sharply in the following year.
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Before following any piece of advice, it’s important to consider who is giving the advice. Someone in their 20s will likely tell you to buy the dip and wait for stocks to recover. However, the advice should be different as an investor gets older.
For instance, the husband said that he and his wife plan to retire in the next five to 10 years. In this scenario, it may make sense to de-risk their portfolio. Instead of investing in high-growth stocks, it may make more sense to invest in blue-chip dividend stocks.
Panic selling isn’t the best response, but it’s also bad to blindly invest without considering your risk tolerance. The husband seems stressed about a $12,000 dip, and that stress may mean the husband is taking too much risk. However, it’s normal for some investors to lose much more than that when the market enters a correction.
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