Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Nov. 9, 2016. U.S. stocks fluctuated in volatile trading in the aftermath of Donald Trump's surprise presidential election win, as speculation the Republican will pursue business-friendly policies offset some of the broader uncertainty surrounding his ascent.
Michael Nagle—Bloomberg/Getty Images
By Penelope Wang
November 9, 2016

People saving for retirement in 401(k) plans are the epitome of hands-off investors. Even during the 2008 financial crisis, fewer than 1% of investors made a move, Vanguard data show. And that inertia might be a very good thing for retirement savers as financial markets digest the surprising victory of Republican presidential candidate Donald Trump, which takes investing uncertainty to a whole new level.

When nervous investors respond to the latest news or market twitches, they often get it wrong. That’s one reason why in the wake of the U.S. presidential election, financial advisors are stressing to their clients a very British world view—keep calm and carry on. If you’ve got a reasonable asset allocation in your 401(k)—a big if, which we’ll come back to further down—keeping your hands off it is probably your best move today…and tomorrow…and next year.

Meanwhile, you’ll benefit from a couple of big advantages of saving in your workplace plan:

You automatically buy low. Everyone knows that buying low and selling high is the way to make money. But 401(k) investors are the rare breed that actually do it, because money is typically siphoned from every paycheck to fund the retirement account. Your steady contributions keep you buying when markets are scary. And you buy more mutual-fund shares when prices are low, fewer when they are high.

“It’s a real advantage not to have to make a conscious decision to buy when the market is tanking,” says behavioral finance expert Meir Statman at Santa Clara University.

The payoff: Among investors who held 401(k) balances between 2009, when the market hit bottom after the financial crisis, and 2014, the median account balance rose 137%, according to Vanguard.

You enjoy lower costs plus financial advice. The costs of 401(k) plans have been dropping fast, which is a good thing in today’s era of lower returns. It means that you can keep more of the returns you earn. Particularly if you work for a large company, the fees in your 401(k) may be lower than what you would pay investing on your own.

What’s more, many 401(k) plans now offer some assistance, so you can easily get reassurance from planners or customer representatives that can help you avoid panic or help you improve your asset mix. All the more reason that 401(k) investors tend to hang on through market gyrations.

Read: Don’t Freak Out About the Markets Today. Do This Instead.

Still, you don’t want to be a permanent hands-off investor. Too much inertia can be a problem, especially as you draw closer to retirement. If you haven’t looked at your portfolio in years, it’s possible you have far too much exposure to stocks today.

If you’re in the boat, a little market turmoil might prove useful. “The silver lining of a market panic is that it prompts you to review your portfolio,” says Linda Robertson, a senior financial planner at Financial Finesse, an employee assistance program.

Robertson notes that she recently received a call from a client who was five years from retirement and worried about the election, but who hadn’t realized that she still had 80% of her money in stocks. You can switch to a more conservative target-date fund, perhaps one closer to 50% stocks and 50% bonds, by calling or clicking on your plan website. “Once you’ve won the game, you should take your money off the table,” says investment adviser William Bernstein, author of “The Four Pillar of Investing.”

In the end, controlling what you can control—your level of savings, your asset mix, and your own behavior—is the best way to ride out market uncertainty, at any age.

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