Posted by Chris O'Sullivan
During these harsh economic times many investors have experienced some sort of decline in their retirement (401k) accounts. However, recent news out of Vanguard shows that many people may be doing much better than expected. On September 30, 2009, the median account held at Vanguard was up 7% from where it was two years earlier when the markets where at their peak.
The stock market is down around 30% from 2007, but the Dow Jones did recently climb back over 10,000. The key to surviving this downturn was proper diversification of your portfolio. Accounts invested heavily in stocks are more likely to be experiencing greater loses than accounts with a mix of less volatile securities like bonds.
Statistics show that account holders 45 years and older are recognizing greater loses in their retirement accounts. Younger people have fared better thanks to continued contributions. Three-quarters of accounts held by people aged 35 of younger are either even or up from September 2007. Part of this can also be explained by the fact that younger people tend to have less money invested in their accounts.
The key to surviving the economic downturn is making continued contributions to your retirement account. Diversifying your portfolio using stocks from emerging sectors of the market is also important. A diverse mix coupled with continued contributions will allow investors to realize bigger gains when the markets finally do recover.
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