Stock market falling? Here's what to do with your 401k.
Stock market falling? Here's what to do with your 401k.
Daniel de Visé, USA TODAYTue, March 3, 2026 at 4:25 PM UTC
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When the stock market falls off a cliff, the natural impulse might be to panic and sell. There’s nothing so stomach-churning as watching your 401(k) sink into the red, with no bottom in sight.
And that’s how many investors probably felt on the morning of March 3, as stock indexes plummeted in response to escalating conflict in Iran.
But panic-selling violates two or three cardinal rules of investing: Buy stocks when prices are low, sell when they’re high. Don’t make impulsive moves. Stick to the plan.
Here are a few rules to remember when markets are reeling:
A falling stock market is a good moment to take stock of the basic rules of investing. One of them says, in effect, "don't panic."Don’t try to time the market
It might sound tempting to cash out of the stock market when the indexes are falling, sit out the downturn, and reinvest when markets hit bottom.
The big problem with that strategy, experts say, is picking the right moment to cash out and cash in.
“Any time you’re trying to avoid a downturn, the risk of being wrong is pretty high,” said Peter Lazaroff, a certified financial planner in St. Louis, speaking to USA TODAY in 2025. “And you have to be correct twice.”
As Lazaroff explains, you have to make two decisions: When to sell high, and when to buy low. Those calls are harder than they sound.
“So often, some of the absolute worst days in the market are in close proximity to some of the absolute best days in the market,” said Kristy Akullian, head of iShares investment strategy, Americas, at BlackRock, speaking to USA TODAY in 2025.
Case in point: April 9, 2025, when stocks rose dramatically after several days of losses amid President Donald Trump’s dramatic tariff campaign.
“The benefit of staying invested is, you’re going to be in the market on the days when there are the biggest gains,” said Patrick Means, vice president and branch manager at a Schwab branch in Dallas, speaking to USA TODAY in 2025.
That leads to our second tip:
Stick to the plan
Stocks rise and fall, sometimes dramatically. For long-term investors, experts say, the best strategy is usually to sit back and let the drama play out.
Bear markets are usually shorter than bull markets, Schwab notes. Since 1966, the average bear market has lasted about 15 months, while the average bull market has endured for nearly six years.
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Following an investment plan over the long term takes discipline, and it’s one of Vanguard’s Principles for Investing Success. (The others: create clear, appropriate investment goals; maintain a balanced and diversified mix of investments; and minimize costs.)
“You can’t control the markets. You don’t know what they’re going to do,” said James Martielli, head of investment and trading services at Vanguard, speaking to USA TODAY in 2025. “You can control yourself, by not making emotional decisions.”
And that leads to our third tip:
Do nothing at all
How stocks are doing today shouldn’t matter much to an investor who is in for the long haul, advisers say.
And that advice applies to just about everyone: If you aren’t in for the long haul, experts say, stocks might not be for you.
“If you need funds soon, don’t have it invested,” said Randy Bruns, a certified financial planner in Naperville, Illinois, speaking to USA TODAY in 2025. “If you don’t need the funds for 15 years, stop looking at the volatility.”
Market downturns tend to be brief. Recessions are shorter than they seem. Anyone who is saving for retirement, or for other long-term goals, can generally ride them out.
“If you have the luxury of being a long-term investor, be one,” Akullian said.
Consider buying stocks at a discount
While financial experts don’t like to see investors make impulsive trades, stock market dips do create opportunities for anyone looking to buy stocks on sale.
The stock market has been historically overpriced. Bargains are few. A market correction means, in effect, that an investor is potentially getting a better deal on any stocks they buy.
If you’re leery about the volatility of individual stocks, one alternative is to purchase broad index funds, which are generally less risky.
Another option is to look “for stocks that are not quite as sensitive to swings,” BlackRock's Akullian said.
Some mutual funds and ETFs are tailored to minimize volatility, with a portfolio that is more predictable than the market as a whole. BlackRock offers an explainer sheet on “minimum volatility” investing.
This article originally appeared on USA TODAY: What to do with your 401(k) when stocks fall
Source: “AOL Money”
