Stock market falling? Here's what to do with your 401k.
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:
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.
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.”
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