Market volatility is scary, but don’t act in haste

WASHINGTON — I don’t come from money. Not even close.

So, when I hovered my computer mouse over the link to view my 401(k) account late Monday, I took a pause, my heart fluttering. It was another day of deep stock market declines.

What would I find? How bad of a hit did my retirement portfolio take? I’m not going to lie: I said a quick prayer.

“Lord, don’t let it be down too much.”

The slide began last Friday, when the Dow Jones industrial average fell by nearly 666 points — the “number of the beast.” And it has been a beastly time.

Monday set a record for the biggest plunge in a single day, with the Dow dropping 1,175 points. This was followed by a day of ups and downs, with the market closing on Tuesday up 567.

I probably shouldn’t have looked at my account. Still, I clicked. The damage wasn’t as bad as I feared, but it wasn’t insignificant. Not when you come from an economic background where $500 is big money. Not when you are the first generation in your family to have money in the market.

Yet, I’m going to listen to the experts. In fact, here’s what a few said about the volatility we’re seeing.

Greg McBride, chief financial analyst for Bankrate. com: “Markets have been addicted to low interest rates and global central banks pumping money into the financial system. As economies around the world are improving, this means higher interest rates and less stimulus from central banks. That’s why investors are throwing a hissy fit. Not because anything is wrong.”

Carolyn McClanahan, a certified financial planner in Jacksonville, Florida: “People should always be in the appropriate asset allocation, taking only the risk they can afford to take. This way, regardless of market direction, they should be able to weather the storms of market upheaval.”

Jeanne Thompson, senior vice president of Fidelity Investments: “When the market is down and you are continuing to contribute on a regular basis, you’re buying in at a lower price, and you are taking advantage of dollar-cost averaging. When the market goes up, you know you’re realizing the growth from the market as well as from your contributions.”

Don’t get so afraid that you pull back from investing. What you should be fearing is inflation. Your money has to grow to keep pace with the future costs of goods and services.

If you’re in your 20s, 30 or early 40s, don’t be afraid to be aggressive.

If you’re in your mid-40s to 50s, stay the course. You still have a lot of years ahead if you plan to retire in your late 60s.

If you’re in your late 60s or retired, evaluate how much risk you can tolerate.

Feel what you feel, but keep in mind that your feelings aren’t facts. And the fact is, the economy is still strong, so don’t panic.