A Redditor Seeks Advice After Wife's 401(k) Lost $12,000 From The Trade Wars: 'Should We Trust The 401(k) Management To Make The Right Moves?'

The recent trade wars have created quite a stir on Wall Street, and some investors are wondering what their next steps should be. 

One of those investors is a husband who posted in the Investing subreddit. He's seeking advice after his wife's 401(k) lost $12,000 from the market's reaction to tariffs.

"Should we trust the 401(k) management to make the right moves?" the husband asked the community. 

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Redditors were quick to comment on the post. Some people offered encouragement, while others scrutinized the husband's desire to retire in five to 10 years.

Remain Patient

Many commenters encouraged the husband to remain patient and wait for the market to recover.

"The most important thing is to not panic and make rash decisions. While this is quite scary, I'm not making any changes," one commenter responded. However, that commenter noticed that they have a 25-year timeframe before it's time for them to retire. 

"Leave it alone! It will rebound. Go on about your way and your day, and don't think about it," another commenter suggested.

The stock market has endured many corrections and crashes. It's returned to all-time highs each time. While it's difficult to remain patient during tough times, many investors endured tariffs in 2018. Stocks didn't do well that year but proceeded to rebound sharply in the following year.

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Know Your Risk Tolerance

Before following any piece of advice, it's important to consider who is giving the advice. Someone in their 20s will likely tell you to buy the dip and wait for stocks to recover. However, the advice should be different as an investor gets older.

For instance, the husband said that he and his wife plan to retire in the next five to 10 years. In this scenario, it may make sense to de-risk their portfolio. Instead of investing in high-growth stocks, it may make more sense to invest in blue-chip dividend stocks.

Panic selling isn't the best response, but it's also bad to blindly invest without considering your risk tolerance. The husband seems stressed about a $12,000 dip, and that stress may mean the husband is taking too much risk. However, it's normal for some investors to lose much more than that when the market enters a correction. 

Many stocks recover after corrections, especially if their fundamentals are strong. Removing your emotions from the situation and asking if a stock's fundamentals are good can help you decide if it makes more sense to buy, hold, or sell. Most commenters suggested buying the dip, but you have to consider your risk tolerance before making any decisions.

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The Couple Isn't Ready To Retire

One of the top comments came from a Redditor who questioned whether the couple is really ready to retire. A $12,000 loss from the current stock market probably isn't significant enough to warrant a retirement in the next five to 10 years. 

"If you lost only $12,000, [it] sounds like you're not that close to retirement. This wouldn't be your first significant drop since investing in your 401(k) either," the commenter stated.

Most of the people who replied to this comment agreed. The only exception is if the couple has enough money coming in from Social Security and pensions to cover their living expenses. The couple may want to focus on pursuing new income streams and advancing in their careers if they want to retire in five to 10 years. If not, it may be best for them to readjust their retirement plans, because you don't want to risk outliving your nest egg.

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