Don't Panic! Selling Stocks Now Could Hurt Your Nest Egg

Nest egg
By Melanie Hicken

The stock market's meltdown may have taken a hit to your retirement savings, but fleeing the market now is one of the last things you should do.

Thursday's sell off, Wall Street's single worst day of the year, may have you thinking it's best to pull out of stocks and wait it out in safer investments like bonds, money market funds or even cash. But financial advisers say not so fast: Staying the course is a much smarter move.

Yes, investing in the stock market is inherently volatile, but it's also the best way for retirement savers to build up nest eggs large enough to last decades. From the European debt crisis to changing Fed policy, there are always going to be events that send stocks plunging, but reacting to those headlines is the wrong long-term strategy, said Stuart Ritter, a financial planner and vice president at T. Rowe Price Investment Services.

After all, retirement savings are built up over decades of investing and daily market fluctuations (even those as drastic as Thursday's plunge) will ultimately be overshadowed by long-term market gains. So even though the Dow Jones Industrial Average shed nearly 4% in the last two days, it still remains up nearly 13% year to date. The S&P 500 and Nasdaq are also up more than 10% from last year.

"The action that may feel emotionally comforting is often the one that sabotages your financial goals in the long term," Ritter said. "We've had situations like this one before. The people who prospered through the 2008 downturn are the people who did not react to the daily gyrations of the market."

Indeed, a recent study by Fidelity Investments found that 401(k) investors who continually invested over the last 10 years saw their average account balances grow by an average annual increase of nearly 17% from $46,000 in 2003 to more than $200,000 in the first quarter of this year. While helped by added contributions, the balances were also boosted by the stock market rebound, said John Sweeney, executive vice president of retirement and investing strategies for Fidelity.

In addition, many retirement accounts are invested in a mix of assets based on your age, which means that the effects on your portfolio may look different from the headlines.

Either way, pulling out of the market now will hurt, rather than help, your retirement savings since you will be selling your investments at a low.

"You've already experienced today's downturn. Getting out now doesn't change it," Ritter said. "If you lock in the losses, you're making it permanent. "

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Vincent Hill

I get paid over $87 per hour working from home with 2 kids at home. I never thought I'd be able to do it but my best friend earns over 10k a month doing this and she convinced me to try. The potential with this is endless. Heres what I've been doing,


June 22 2013 at 7:25 PM Report abuse -1 rate up rate down Reply

Dont sell cuz short sellers already sold yours!

June 22 2013 at 4:59 AM Report abuse -1 rate up rate down Reply
1 reply to Gumby's comment

Your broker gave your shares to shortsellers to sell short because you are on margin call . Rule to remember by: dont borrow to buy shares!

June 22 2013 at 5:00 AM Report abuse -2 rate up rate down Reply

wail hail why not get out now and let me come in and buy at a bargain price. i love picking up bargains and making max profits.

June 21 2013 at 5:14 PM Report abuse -1 rate up rate down Reply

Yeah, tell me another lie like those Wall Street infomercials posing as real financial news. ; the same stations over which Ken Ley was saying Enron was underpriced, two days before it collapsed. There are no fundamentals to justify the high stocks prices, so when quantitative easing ends the Dow should find its real level at about 700. So if you don\'t have a computer program that can trade in a matter of nano seconds, you lose.If you made some money with he current rise get out

June 21 2013 at 2:41 PM Report abuse rate up rate down Reply

dont worry about it, the big boys got it all figured out

June 21 2013 at 1:57 PM Report abuse +1 rate up rate down Reply

Of course Wall Street doesn't want you to sell your stock. They couldn't possible make good on it if even 25% of the people made the demand. Your stock certificate is simply a piece of paper in the "Great Ponzi Scheme"

June 21 2013 at 11:46 AM Report abuse +3 rate up rate down Reply
1 reply to ivyteainn's comment

Naw! The Fed will gladly buy your stock!

June 22 2013 at 5:02 AM Report abuse -2 rate up rate down Reply

The housing bubble bursting and more or less economic chaos about halved the markets a few years ago. Seems improbable it could happen again without a some bonus "panic" factors, but a 25% correction is not out of the picture. I can even think of some bonus panic possibilities.

June 21 2013 at 11:01 AM Report abuse rate up rate down Reply

Believe I heard those same words about 4ish years ago. Don't get out at 12,000, or 11,000, or 10,000 or 9,000. In fact, do not let 8,000 worry you. You will always have a chance to get out lower.

June 21 2013 at 10:57 AM Report abuse +2 rate up rate down Reply

dont panic, leave your stocks alone until the big boys cash out & crash the market again

June 21 2013 at 10:42 AM Report abuse +1 rate up rate down Reply
1 reply to artisangrinding's comment

They are pile driving your stocks to smithereens!

June 22 2013 at 5:03 AM Report abuse rate up rate down Reply