It is possible to make money with your 401k, even in a slow economy. Stock market trading is risky, but it can be lucrative for savvy investors. For those who are currently invested in a 401k, money market fund or IRA, the state of the economy is a concern. In a bad economy, you might see monetary losses up to 40 percent in your 401k account and may be considering removing yourself from the stock market completely. History has shown that may not be a wise choice. When the stock market took a serious hit in the 1980s, many investors pulled out and lost substantial returns when the market rebounded, while those who rode out the economic downturn often became rich. By following a few simple investment strategies, you can make money with your 401k in a bad economy.
Consider consulting with a professional if you don't know how stocks, bonds, CDs, 401k's and IRAs work. A financial adviser will help you take a look at your 401k account and decide what is good and bad about your investments. With a qualified financial adviser handling your portfolio, you stand to make more than if you attempt to handle your investments yourself.
Get diversified. Your financial adviser will probably tell you that diversity is key to making money in the stock market. In a bear market, you may want to increase your safer investments and decrease your high-risk stocks. Consider investing in stock market trading software to help you with the trading process. You want to have money in stocks, bonds and CDs to stay safe in a bear market.
Keep an eye on your investments. If they are continually decreasing, ask your financial adviser for advice. It is also helpful if you become somewhat knowledgeable about your investments so you can give some educated input. To earn money using investments, you have to be aware of fluctuations in the market.
Roll over your 401k and put your money into an IRA if you leave your job. It may cost you substantially to cash out now. You can also put your money into an individual 401k plan until you find other employment.
Continue to make, and even increase, retirement contributions if you are 40 or more years away from retiring. Remember to keep an eye on your asset allocations. If you have 10 or fewer years, then opt for more conservative investments. Watch your money grow and adjust as needed to increase income.
Invest in index funds. Index funds are a relatively safe investment. The return is not as high as other options, but the risk is relatively low. Some index funds include the S&P 500, Small Cap, International (Europe and Asia) and Value. Talk to your financial adviser about options.
Look into investing in a stable value fund. These invest in high-quality bonds. The rate of maturity is about 3 years on average. Talk to your financial adviser. You can make good money from stable value funds.