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The Denver Post - - BUSINESS -

It’s like rub­ber­neck­ing af­ter a car ac­ci­dent: The mar­ket sinks dra­mat­i­cally, as it has for most of 2016, and vir­tu­ally ev­ery­one with a 401(k) plan sud­denly can’t look away from the wreck­age.

The rule of thumb for 401(k) plans dur­ing mar­ket volatil­ity is to, in fact, do noth­ing. As T. Rowe Price’s best-prac­tices guide ex­plains, mar­kets have en­joyed a 75-year stretch of in­creases. Peo­ple­who keep their re­tire­ment money in­vested over the long haul do bet­ter than those­who try to pre­dict down­turns. Dur­ing the fi­nan­cial cri­sis, for ex­am­ple, Fi­delity found that those­who didn’t take money out of their plans saw88 per­cent growth over the next five years. Saver­swho­moved as­sets out of eq­ui­ties in 2008 and re­mained that­way for the next five years saw15 per­cent growth.

The good news: Amer­i­cans with 401(k) plans may have learned the lessons. Even dur­ing the fi­nan­cial cri­sis, only 1 per­cent of Fi­delity’s plan hold­ers got com­pletely out of eq­ui­ties. In any given year, on av­er­age, 10 per­cent of Fi­delity plan hold­ers will move money be­tween funds. Bloomberg News

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