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Counting Your Blessings? Don’t Forget Your Retirement Account

4 Minute Read

It may not be at the top of your list of things to be thankful for this year, but a growing retirement nest egg is one blessing you shouldn’t overlook.

According to Fidelity Investments’ analysis of 401(k)s and IRAs, the average 401(k) balance in the second quarter of 2014 had grown by 12.9% since last year. The average IRA balance had increased by 14.7% over the same time period. More than three-quarters of that growth came from investment gains.

The market bobbled a bit in the second half of the year, but by November 13, the S&P 500 was up 10% for the year.

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All in all, that’s not a bad year for retirement investing. Sure, we’ve seen better, and we all know we’ve seen worse. This year turned out to be one of those average growth years that simply feels . . . well, average.

As any investor knows, the stock market is capable of taking us for wild rides with ups and downs that will make us long for a slow and steady year like this one. But here’s the thing: whether the market is up or down, the long-term investor can find something to be thankful for.

Everyone Loves an Upward Trend

It’s easy to be happy when the stock market is up. Your mutual funds perform well, your retirement balance goes up—you feel like a genius with the Midas touch. The only danger you face is becoming too confident. You might try chasing funds with the highest returns instead of sticking to your tried and true investments. Or, you might invest money you should be using to pay down your mortgage or rebuild your emergency fund.

Don’t play risky games with your retirement. Trust that the investments you chose in a calm, rational moment are still the best mutual funds for your long-term retirement plan. You’ll be glad you did when the market begins to cycle down.

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Every Down Market Has Its Bright Side

If you love getting a deal, surviving a stock market slide won’t be tough for you. Sure, you’ll see the value of your investments fall, right along with everyone else. But as long as you don’t sell those investments, you won’t lose any actual money. You still own all the mutual fund shares you did before, they just aren’t worth as much.

The bright side? As the stock market falls, the new money you put into your retirement investments will go further because the mutual fund shares you’re buying are now cheaper. The investor-speak term for this is called dollar cost averaging, and it simply means you continue to invest the same amount at regular intervals—like every pay period or every month—no matter what the stock market is doing.

Once the stock market revs back up, you have more mutual funds (bought on sale) to power the recovery of your retirement account. This is one of the vital secrets to building your nest egg even when the stock market is in a slump.

Keep a Level Head and Avoid Retirement Regrets

When you boil all this down, successful retirement investing depends a lot on managing your emotions. Being overly confident or overly fearful can spell disaster. A long-term mindset can help you avoid both, but most of us will need some objective advice from time to time to maintain that perspective.

An experienced investing advisor can give you the guidance you need to get through the tough times—and even the good times—with a level head and a growing retirement account you can continue to be thankful for. We can put you in touch with an investing professional in your area who has earned Dave’s recommendation for great advice and excellent service.

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