Magellan Financial Advisors

Asset & Wealth Management in Allentown, Pa

The life you imagine is built on the decisions you make today.

 610-437-5650

  •  Home
  • Services
    • Investment Planning
      • Wells Fargo Advisors’ Envision® Process
      • Investment Planning Process
      • Life Insurance Services
      • Estate Planning Strategies
      • Impact Investing
    • Investment Management
      • Tactical Asset Allocation
    • College Savings Plans
      • College Savings Basics: How & When To Save
    • Business Financial Services
    • Retirement Planning Services
      • Retirement Is For Living
      • Social Security & Medicare Benefits
  • Impact Investing
  • Team
  • Become A Client
  • Work At Magellan
  • Blog
  • 401k
  • Contact

Should I Cash In My 401k?

Apr 03 2020

401k Cash In Allentown PA

"I learned that courage was not the absence of fear, but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear."

Nelson Mandela

As the stock market falls in response to the spread of Coronavirus, it can seem incredibly rational to move your 401k and other investments to the sideline. If you’re like many people, your instincts say to shift the balance from  stock funds into the cash fund “until things get better.” As humans we are emotional by nature and panic is a natural response as fear continues to fester amongst investors. But is “cashing in” your 401k account the right move?

The Prudent Response to Not Cash In

According to Louis S. Harvey, the answer is “No.” In the last 35 years there have been 10 periods of market crisis that resulted in 70% of lost returns. The “prudent response” was to continue investing as prior to the disruption as history shows quick recoveries. 

What is needed now is not panic selling, but perspective and patience.

For some perspective, this is not 1929, 2001 or 2008 for two very important reasons: 

  • Government appears to be erring on the side of overreacting, not underreacting to the crisis. The recent passage of a $2 trillion stimulus package is historic.
  • The Federal Reserve has shown it has learned from the previous major crisis and is not afraid to act. In the words of  Wells Fargo strategist Christopher Harvey, “The Fed took the kitchen sink and threw it at the market. Then it took another kitchen sink and threw it at the market.” 

Patience is required to understand that markets have always recovered from crisis, both small and large. It doesn’t happen overnight, but every bear market has recovered to see stock market indices reach new all-time high levels.

Proactive Steps to Take With Your 401k

Rather than panic, Magellan Financial suggests these proactive steps:

If you are saving for retirement but not close to retirement: 

  • Continue saving as normal in your company retirement plan. 
  • Look at tactically tilting your portfolio, overweighting areas of the markets that have been most effected.
  • If you have job stability consider increasing your contribution rate to take advantage of the market selloff.

If you are saving for retirement and close to retirement:

  • Continue to save as normal in your company retirement plan.
  • Review your investment and retirement plan with an experienced investment planner to make sure you are still on track to reach your retirement goals. No plan? We can help.

Adjust your savings and Asset Allocation based on your updated investment and retirement plan.

Living in Retirement Lessons

There is never an all-clear signal in bear markets (nobody rings a bell). As investors we need to be brave and overcome those natural fears that come with market disruptions. Prudent investing requires the patience and perspective to stay invested through both the good times and the bad times. 

Preparing for unexpected – but common – retirement events such as a sharp market decline is one of the key lessons of good retirement planning. Sensible strategies like having an emergency fund, diversifying your investments, and ensuring that your retirement can help you prepare for most contingencies. 

Have no plan or need help with your investment and retirement plan? Not sure if your current portfolio matches it? Contact us for successful investment management!

Categorized: Retirement Planning
Tagged: 401k Retirement Plan, Investment Management, Retirement Mistakes

Recent Posts

  • 5 Financial Moves for the Post COVID-19 World
  • Monthly Stock Market Review – November 2020
  • 5 Characteristics to Look for in an Investment Planner
  • Monthly Stock Market Review – October 2020

Categories

Archives

Blog Subscription


Contact Magellan Financial Advisors

MAGELLAN FINANCIAL, INC.

1605 N Cedar Crest Blvd #111
Allentown, PA 18104 USA

 610-437-5650

Toll Free:  1-888-437-5650
Fax:  610-437-5654
Email:  Rob.Cahill@WFAFiNet.com
Click Here for Directions

Financial Services

  •  Investment Planning
  •   Investment Management
  •   Business Owners
  •   Retirement Planning Services
  •   401(K) Retirement Plans
  •   Socially Responsible Investing

Client Resources

  •   Educational Resources
  •   Family & Finances
  •   Business Financial Services
  •   Stock Market Review
  •   Retirement Planning
  • Life Insurance
Investments in Securities and Insurance Products:
Not Insured by FDIC or any Federal Government Agency
May Lose Value
Not a Deposit of or Guaranteed by a Bank or Any Bank Affiliate

Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN). Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC (WFCS) and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affliates of Wells Fargo & Company. WellsTrade brokerage accounts are offered through WFCS.

This information is intended for use only by residents of AZ, CA, CO, CT, DC, DE, FL, IL, IN, KY, MA, MD, NC, NJ, NM, NY, OH, PA SC, UT, VA, VT, WA, WI. Securities related services by Magellan Financial, Inc., may not be provided to individuals residing in any state not listed above. Insurance-related services may be provided by Robert I. Cahill, CFP, Managing Partner, only to individuals residing in: AZ, CO, FL, MA, NJ, NY, PA, SC, VA.

A Note About Social Media
Opinions, comments and actions taken on Social Media are those of the third party and do not necessarily reflect the views of the creator of this profile or of the firm. Social Media is intended for U.S. residents only and subject to the following terms: wellsfargoadvisors.com/social.

Privacy Policy | Legal | Security | Sitemap ©2021 Magellan Financial, Inc. | All Rights Reserved Designed And Developed By DaBrian Marketing Group, LLC.
MENU
  •  Home
  • Services
    • Investment Planning
      • Wells Fargo Advisors’ Envision® Process
      • Investment Planning Process
      • Life Insurance Services
      • Estate Planning Strategies
      • Impact Investing
    • Investment Management
      • Tactical Asset Allocation
    • College Savings Plans
      • College Savings Basics: How & When To Save
    • Business Financial Services
    • Retirement Planning Services
      • Retirement Is For Living
      • Social Security & Medicare Benefits
  • Impact Investing
  • Team
  • Become A Client
  • Work At Magellan
  • Blog
  • 401k
  • Contact