The Ups and Downs of Your 401(k)
For the past five years you have been watching your
retirement account grow dramatically. You have been
receiving 20 to 24 percent returns on your investments and
now you're experiencing dramatic losses. Why is
The way the stock market has been taking a downward
slide, many 401(k) participants have been experiencing
losses. But last year, the average investment returned on
the 401(k) balances declined by 4 percent. And one third
of those investing in 401(k) plans have done so only over
the previous five years, when returns averaged a gain of
The news of losses in 401(k) accounts caused a sharp
increase in the number of calls and Web inquiries at the
nation's biggest financial managers. For example,
Fidelity Investment's Web site traffic jumped by 75
percent in the first week of the new year, and the
Vanguard Group's Web traffic increased by 20 percent.
At this time, Vanguard is counseling its investors, saying
that they should stick with a sound investment plan and
remember that it's for retirement, not for immediate
"A one year setback should be something that
participants in a 401(k) programs take in stride,"
said Sean Hagerty, spokesman for Vanguard. "They
should understand it's part of the risk that
they're taking for an overall retirement plan with a
Fortunately, history may be on every investor's side.
Only once in the last 30 years has the stock market
suffered back-to-back declines. And during those 30 years,
stock prices have risen more than 1000 percent.