Here's what happens when you panic and sell your 401(k) investments

[Peter1469]

Here's what happens when you panic and sell your 401(k) investments

Whatever you do, don't liquidate investments during a temporary downturn, especially one not caused by systematic problems in the US economy.

Philosopher Daniel Dennett said, "As every scuba diver knows, panic is your worst enemy: When it hits, your mind starts to thrash, and you are likely to do something really stupid and self-destructive." His conclusion is not exclusive to scuba diving – and is particularly relevant in the current stock market environment.

On Feb. 12, the Dow Jones Industrial Average closed at 29,551. A month later, the blue-chip index has dipped below 22,000 – a drop of about 25%. Fueled by coronavirus fears and uncertainty around oil prices, investors dumped their holdings to limit losses.


As a 401(k) investor, you might be tempted to follow suit. Or maybe you already have. Either way, you should know these three consequences of selling in a panic.

[Cotton1]

It not only costs you a 10% penalty it creates a taxable event.

[Peter1469]

It not only costs you a 10% penalty it creates a taxable event.

True. And the penalty is higher for some investments such as the TSP.

[Cotton1]

Tell you this. Ive never seen a market hit Fibonacci 1 this fast. We either find support here or we likely hit Fibonacci 2 at 16,000. This is one ugly bich.

[Peter1469]

Tell you this. Ive never seen a market hit Fibonacci 1 this fast. We either find support here or we likely hit Fibonacci 2 at 16,000. This is one ugly bich.

And pure emotion.

[Cotton1]

And pure emotion.

There is going to be a lot of bad EPS reports plus as u mentioned the FED tapped out at 0%. I almost got my ass kicked on synthetic nuetral in gold derivitives but so far so good. Im losing on the overall trade but if I can keep it between the ditches a little longer ill get out alive

[Hoosier8]

I haven't lost any money in my 401K because I have not sold off any of it. Now is the time to buy.

[Peter1469]

I haven't lost any money in my 401K because I have not sold off any of it. Now is the time to buy.

I would hold off buy for the present. Save and prepare to buy about the time we learn the COVID-19 has peaked in the US.

[Hoosier8]

I would hold off buy for the present. Save and prepare to buy about the time we learn the COVID-19 has peaked in the US.

Any time now is a good time to buy because the bounce will be pretty good in say 2-3 months.

[Peter1469]

Any time now is a good time to buy because the bounce will be pretty good in say 2-3 months.

I won't try to talk you out of it.

I have already provided my advice.