Navigating the volatile stock market and your 401K

By Heather Sullivan - bio | email

RICHMOND, VA (WWBT) - After Thursday's sell-off on the stock market and several other drops recently, you're probably pretty worried about your 401k or investments. Should you make changes? Where will the market go next?

At RiverFront Investment Group in Richmond, analysts are trying to navigate the stock market after the recent sell offs. Said Chief Investment Strategist and frequent CNBC guest Rod Smyth, "Investor confidence is at very low levels. People are very worried, literally worried."

Smyth says the rough times are likely not over, but believes the long term picture is brighter. Whether to worry about your 401k depends on how many years you have until retirement. "If you're ten years, or better still if you're 15 or 20 years, you should almost be saying 'yippee' because if its a 401k, you're actually putting pennies in the jar."

He says people five to 10 years from retirement can reduce their risk. Explained Smyth, "In your 401k, you can have stocks, but you can also have bonds and other things and that will act as a ballast and make the whole thing less volatile."

Brokerage firms like Charles Schwab, Vanguard, and Fidelity have recently cut their trading fees to get you to buy more stock. Smyth says its not a bad idea because stock prices are still low. "From a long term perspective, I think this is an okay time for investors. So if you're invested and you really do have a five to 10 horizon, and this is an okay time."

Smyth expects the market to grow 10 percent to 15 percent over the next year. He recommends choosing stock in companies that are long standing and have few real competitors. "High quality stocks, companies that have strong balance sheets, global franchises, so they're not just dependent on the U.S. and they pay dividends. We like lower quality bonds."

For advice about your investments, you can find financial planners through National Association of Personal Financial Advisors, the Financial Planning Association, and the Certified Financial Planner Board of Standards.

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