Let’s face it: it has been a tough market since the outbreak of the COVID-19 virus. If you are like many investors, you have seen the value of your 401(k) drop like an airplane in a nosedive. Fortunately, there are smart things that you can do now to protect as well as take advantage of the opportunity. Let us know if you have questions on any of these as we are here to help.
- Consider increasing your contribution to your 401(k). You have heard of the fire sale, well the stock market is definitely on sale. If you are not investing in your 401(k), now would be a good time to start. If your time horizon is long, consider investing in stock funds as these have been hit the hardest.
- Consider Investing in Lockheed stock (LMT) inside your 401(k). As of the date of this writing, the stock has dropped 21% from its 52-week high. While there may be more volatility ahead, if you are a long-term investor, buying in a bear market may go a long way towards the future growth of your 401(k). As with any investing, make sure you are well diversified and do not put all of your eggs into one basket.
- If you have a large position in Lockheed stock, consider using equity Options¹ to protect you on the downside. Investing in options is basically like buying insurance to protect your portfolio if the stock goes down. Options can be complex so it is recommended that you work with a professional to do this.
- If you have a lot of bond funds in your 401k, and your time horizon for retirement is longer than five years, consider reallocating into a stock mutual fund over time. This will allow you to sell your bond funds that have made money and buy the stock funds that have lost money at a lower price. That, my friend, is investing 101!
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