Weekly Commentary for May 14, 2012
Market fluctuations. If you opened your first quarter 401(k) statement, you hopefully saw some gains as the markets have enjoyed a strong rally over the past several months, even reaching 14-year highs. So don’t let the past few weeks of market fluctuations get you down.
For many employees, their employer’s 401(k) is still the best vehicle for their retirement savings. Certainly if your employer offers 401(k) matches, you should continue contributing to your account at least up to the maximum employer match – otherwise, you’re leaving money on the table that your employer is willing to give you. Even if your employer does not offer a 401(k) match, contributing to your 401(k) is probably one of the easiest ways to save for retirement – regardless of market gyrations.
Because your contribution is taken directly from your paycheck, you aren’t faced with making the decision each pay period of whether or not to put money away – something you may be less likely to do when you’re worried about cash flow. In addition, during market lows, you may be paying less for the investments you purchase within your 401(k) account. If you stop contributing, you will likely not restart until the market has already logged some significant increases, meaning you may miss out on the upside potential of those purchases. Market fluctuation is normal, especially following a lengthy amount of growth, such as we’ve seen through most of first quarter 2012.
Now may be a good time to review the amount you are contributing to your 401(k) and consider whether you could be contributing more, thereby potentially leveraging your purchasing power when prices are relatively low. You may also want to make adjustments in your investment allocations within your 401(k) account.
The Dow is still nearly 6 percent year-to-date and more than 18 percent for the past three years, so don’t stop making contributions to your savings. We can help you review your 401(k) account to ensure you are making the most of this retirement vehicle. We can also suggest ways to potentially supplement your retirement savings with other investments. Call your Denver area wealth manager, Jordan Dechtman, today at 303-741-9772 and email him at Jordan@JordanDechtman.com to schedule a 401(k) review today.