Should I wait to contribute to my 401(k) until the market improves?

Yvonne asks: I have been working for the past year and have not yet contributed to my 401(k). The common opinion around the office is to not bother, given the current state of the market. One co-worker had lost 40 percent of what he had contributed the previous year. What do you think? Am I better off placing money for retirement in another savings vehicle? My employer does not match 401(k) contributions.

Very simply, Yvonne, start contributing to your 401(k) today!

Investing, including in your 401(k) plan, is a long road. The best long-term investors (whether they’re professionals or individuals like you and me) make consistent contributions to investments in good times and bad. Basically, they ignore the market and keep on investing.

Obviously, the markets have ups and downs, and we’re just coming out of a pretty big “down”. Almost everybody lost a big chunk of their retirement savings last year. Mine was down about 35 percent a year ago, although it has almost entirely recovered. I didn’t actually “lose” that money because I’m invested for the long haul; I didn’t cash out. You only truly lose the money if you cash out while you’re down.

The markets will always be volatile, but as long as you make investing a habit and stay invested for the long-haul, it really doesn’t matter.

Good Luck,

David @MoneyUnder30