How to keep your 401(k) on track amid dire news alerts

(This article appeared in Kiplinger on July 27, 2025).

History shows that consistent, disciplined investing far outweighs any attempt at market timing, so focus on long-term growth and tune out the sky-is-falling news headlines.

If there’s one lesson to share with 401(k) investors, it’s this: Long-term investing prevails over short-term reactions.

Ignoring the nonstop news notifications is crucial in today’s 24/7/365 news cycle. The daily noise—news alerts, market flashes, economic predictions—should rarely, if ever, dictate your retirement strategy.

As an asset manager, our responsibility is to steward clients’ assets with diligence.

Over the years, we have witnessed countless market cycles, seen investors experience periods of highs and lows and observed how investor sentiment often swings wildly, influenced by the relentless drumbeat of daily financial headlines.

The principles of long-term investing in 401(k) and IRA assets apply equally to those still working and contributing to their retirement plans and to those who are retired.

The allure and danger of daily headlines

Every morning, investors wake up to a torrent of headlines—Stocks Plunge on Fed Fears, Markets Rally as Inflation Cools, Global Recession Looms—the verbiage is urgent and, often, anxiety-inducing.

Some news outlets, in their efforts to keep you engaged, are incentivized to dramatize market movements. Social media amplifies this further, with opinions and hot takes outpacing even the fastest breaking news.

For 401(k) investors, this environment creates a powerful temptation to react—to sell when the market sours, to buy when euphoria peaks and to constantly tweak investment allocations based on what’s happening right now.

However, history and discipline tell us that such short-term behavior is one of the most consistent destroyers of long-term wealth.

A powerful principle of investing is illustrated here: Investments are like a bar of soap in that the more you touch them, the less you may have.

Understanding the purpose of a 401(k)

A 401(k) account is, by design, a vehicle for long-term, tax-advantaged retirement saving. Its power lies in tax-deferred (or tax-free with a Roth 401(k)) compounding—over decades. The very structure of the 401(k) encourages patience; early withdrawals are penalized.

Many investors get distracted by market noise and lose sight of their long-term goals. Seeing your account balance drop can be distressing. But succumbing to this anxiety by reacting to daily headlines often results in poor decisions.

An easy mistake for a 401(k) investor to make is to equate their investment time horizon with their retirement date. The investor is better served to think of their 401(k) account through retirement. Viewing this account as meant to last for the rest of their lives will provide the benefit of a longer time horizon.

Volatility: A feature, not a bug

One of the hardest truths for investors to accept is that market volatility is normal and necessary. The equity markets have always been a bumpy ride, with regular corrections and occasional bear markets punctuating decades of overall advances.

Consider the history of the S&P 500 Index: Over the last century, it has weathered world wars, recessions, inflation crises, terrorist attacks, technological revolutions and pandemics. There have been crashes, booms and everything in between.

Yet, for patient investors, the long-term trend has been upward. Those who stayed the course made gains, while those who sold in fear or tried to time the market often missed the strongest rebounds.

The cost of market timing

Perhaps the most compelling argument against reacting to daily headlines is the overwhelming evidence that market timing doesn’t work. For the average 401(k) participant, making frequent portfolio changes based on news headlines is almost guaranteed to reduce long-term returns.

Missing a handful of the market’s best days can dramatically impact your wealth. For example, research from J.P. Morgan Asset Management found that from 2004 to 2024, if an investor missed the 10 best days in the S&P 500, their overall return was cut in half compared with someone who stayed fully invested.¹

Notably, these best days often occur amid periods of intense volatility, when headlines are most frightening. Selling during downturns means you’re likely to miss the subsequent recovery.

Behavioral biases and the media

Human beings are hardwired to seek safety and respond to perceived threats. This tendency, while useful in many areas, often leads to poor outcomes in investing.

Some in the media exploit these biases by highlighting risk and uncertainty, making it feel rational to act in times of turmoil.

Behavioral finance has identified several cognitive errors that plague investors— loss aversion, recency bias, herd mentality and overconfidence, to name a few. The constant barrage of alarming headlines feeds these biases, making us more likely to make impulsive decisions that derail our long-term plans.

The power of staying the course

What’s the alternative? The answer is deceptively simple: Develop a well-thought-out investment plan, aligned with your risk tolerance and time horizon, and stick to it.

The most successful 401(k) investors are those who automate their contributions, diversify their portfolios and resist the urge to tinker in response to the news cycle.

It’s wise to periodically review your portfolio, rebalance your allocations and reassess your goals as your life circumstances change. But these adjustments should be made according to a disciplined strategy—not in knee-jerk response to headlines.

Building wealth through consistency and patience

Let’s return to the basics: Wealth in a 401(k) comes from regular contributions, prudent asset allocation and the steady accumulation of returns over time. The market will always have its ups and downs; what matters is your ability to remain committed to your plan.

Dollar-cost averaging—investing a fixed amount at regular intervals—allows you to buy more shares when prices are low and fewer when prices are high, smoothing the impact of volatility.

Compounding does the rest, gradually transforming regular contributions into significant wealth.

Guidelines for navigating market noise

• Define your goals. Know why you’re investing — retirement, a home, education — and keep your eyes on the prize.
• Understand your risk tolerance. Choose an asset allocation that fits your comfort level so you’re less tempted to react during downturns.
• Automate contributions. Take emotion out of the process by setting up automatic deposits into your 401(k).
• Review, don’t react. Schedule regular portfolio reviews rather than checking your balance daily.
• Seek professional guidance. If you’re unsure, consult a financial adviser who can help you maintain perspective and discipline.
   

Conclusion: Focusing on what matters

The news cycle shouldn’t dictate your financial future. The headlines will always change—sometimes optimistic, sometimes dire—but your 401(k) is a long-term endeavor.

History favors those who invest with patience and discipline, tuning out the short-term noise in favor of long-term growth. By ignoring the distractions and focusing on your future, you empower yourself to build the kind of retirement you deserve.

Remember, volatility is temporary, but your goals are enduring. The path to lasting wealth is paved not with frantic reactions, but with steadfast resolve. Your future is too important to be left at the mercy of today’s news.