(NewsNation) — Donald Trump’s tariffs have set the stock market on a roller coaster ride, and many Americans have seen their retirement accounts plunge in recent days.
Doug Flynn, a certified financial planner and contributor to five best-selling personal finance books, joined NewsNation’s Connell McShane on Wednesday to answer your 401(k) and investment questions.
Watch the full Q&A in the player above.
The main takeaway: Stay calm when markets are volatile and try to avoid emotional decisions.
“Don’t make those major shifts during a time of stress; that’s when people make mistakes,” Flynn said.
Is it a good idea to rebalance your portfolio?
Rebalancing means adjusting the mix of assets in your portfolio to make sure they align with your goals and risk tolerance.
“I love rebalancing,” Flynn said. “I think it’s the single best thing that you can do to pull extra return out of the portfolio over the long haul.”
Generally, younger people who aren’t close to retirement should lean more toward stocks for long-term growth. Whereas those closer to retirement typically want to shift toward lower-risk investments such as bonds.
When the stock market is booming, as it has been in recent years, your stock allocation is likely a larger part of your portfolio, so it’s a good idea to check if adjustments are needed.
“The concept of rebalancing is: as the stocks are going up, you trim from them and add to the bonds,” Flynn said.
Many 401(k)s rebalance automatically, so it’s worth checking if yours does. If not, you may need to tweak your asset allocation.
Should you increase your 401(k) contribution when stocks are down?
Market volatility can create buying opportunities for those with longer time horizons, so increasing your retirement contributions and buying low can be a smart move, Flynn said.
However, that’s only a good idea if you don’t need the money for several years and have built up emergency savings.
Flynn cautioned against increasing your 401(k) contributions if it means taking away from your cash cushion for expenses.
“Volatility is your friend when you’re investing for the long haul,” Flynn said. “Don’t put your money in the market if you need it tomorrow.”