The stock market has fallen sharply in recent days after President Donald Trump announced new tariffs on imports. Experts say the best thing to do with your 401(k) is to stay the course. “Resist the urge to shift out of stocks entirely,” advises Christine Benz, director of personal finance at Morningstar.
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She says leaving the market could provide short-term relief but will soon be replaced by worries about when to get back in. Most of the stock market’s gains happen in just a few days each year. Missing those key days by trying to time the market can dramatically reduce your returns over the long run.
Few will push back against the notion that today was one of the wildest market sessions in an economic and financial world that is NOT subject to a massive exogenous shock and/or institutional failures.
The S&P traded in an eight percentage point range (+3.4% to -4.7%) before…— Mohamed A. El-Erian (@elerianm) April 7, 2025
“If you missed the market’s 10 best days over the past 30 years, your returns would have been cut in half,” notes Hartford Funds. “And missing the best 30 days would have reduced your returns by an astonishing 83%.”
Financial advisors recommend diversifying your investments, including some holdings in international markets.
Investments during tariff volatility
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They also stress the importance of gradually making your portfolio more conservative as you near retirement age. This means shifting more money from stocks into bonds and other stable options. However, experts say even retirees, especially early in retirement, should keep some money in stocks.
This allows the portfolio to keep growing to support a retirement that could last decades. “It is hard to roll with the punches when some days you feel like your portfolio is being pummeled,” said Brian Jacobsen, chief economist at Annex Wealth Management. “But those moments should pass.
A diversified strategy that is thoughtfully adapting to changing circumstances can’t prevent the punches, but it can help soften the blows.”
President Trump has defended the new tariffs, arguing they will bring manufacturing jobs back to the U.S. “I don’t want anything to go down, but sometimes you have to take medicine to fix something,” he said. “We have been treated so badly by other countries because we had stupid leadership that allowed this to happen.”
