Then the most recent down market occurs, and suddenly, achieving your objective of having a safe retirement seems to be moving farther and further away with each new financial statement. What are some good strategies to use when things become difficult? Bear-proofing your 401(k) plan is as simple as following these four steps.

Set Your Goals

A difficult situation may be made much worse by haphazardly stumbling through a losing run in the market without a plan. If you don't know how much money you'll need to reach your retirement objectives, you won't be able to appropriately gauge the amount of harm caused by a drop in the market.

When it comes to investing, it's not about attempting to choose a winning stock or mutual fund and riding it to the moon. Your focus should be on establishing an objective that is attainable and on developing an investment plan that is geared toward achieving it. Think about how much time it could take to accomplish your goal, and always be prepared with an alternate strategy in case things don't turn out how you hoped they would.

Plan Your Asset Allocation

After you have calculated the amount of money you will need, the following step is to determine how your investments may assist you in reaching your financial goals. The proper distribution of assets is essential. To protect yourself from the ups and downs of the market, you should diversify your wealth by purchasing both stocks and bonds; however, the specific proportions you choose will depend on variables such as your age and level of comfort with taking risks. Younger investors have more time to recuperate losses sustained in a bad market. As a result, they may benefit less from the benefits of bonds in minimizing the risk and volatility of a retirement portfolio. It is particularly important to diversify your holdings if a significant portion of your retirement fund comprises your company's shares.

Don't Panic

It is acceptable to "bear-proof" your portfolio during market volatility; actions such as diversifying your holdings and shifting away from equities and equity mutual funds with a higher chance of loss may pay off even after the bear market has ended. Simply put, you shouldn't succumb to the temptations of selling in a panic.

When there is a lot of tension in the market, the desire to sell everything you own might become overwhelming. In the contemporary period, every bear market has been followed by a recovery for the stock market. It is always possible that things will be different this time or the next time. If, on the other hand, you choose to lock in your paper losses by selling while prices are low, there is a substantial possibility that future market gains will ultimately wipe your paper losses. This conclusion is based on an extensive historical record.

What actions should you take when the market is in a bearish trend? If you had a long-term investing strategy before the markets took a fall, it is time to reevaluate your plan now that the markets are in a bear market. Are you still working toward the same goals? Is your retirement still a few decades away at this point? If the specifics of your circumstance have not changed, now is not the time to make significant adjustments to your general investing plan. Prices of stocks often go up and down. Adjusting your plan just because they have experienced a setback is not necessary.

Keep Investing

When market prices go down, many individuals desire to sell their assets and get out of the market. This is an emotional reaction that is prompted by fear. Think about the possibility of decreased share prices equating to a sale instead. If anything you desired, such as a vehicle, a computer, or a weekend vacation, were on sale at a discount, you probably wouldn't be able to resist the urge to buy it immediately. During a bear market, many investors are reluctant to significantly increase their equity holdings since there is a possibility that prices may fall much more shortly. However, just as the market cannot continue to rise forever, it cannot continue to plummet forever. Just because the stock market is having trouble right now does not mean you should cut your contributions to your 401(k) or the portion of fresh savings you put into equities.

If you can do so, increasing the portion of your salary that you put into your 401(k) plan during a bear market is frequently the best thing you can do if you have the financial means to do so. If your employer offers a matching contribution, you should increase the amount you contribute to at least equal the maximum match. Your plan will be able to make up for its losses from the bear market much more quickly if you can negotiate for the greatest possible employer match. This investment will be the simplest and least hazardous you will ever make.