Retirement > 401(k)s & IRAs
401(k) activity hits record
September 18, 2001: 7:55 p.m. ET

Report: Wall Street reopen scores the highest volume of 401(k) transactions
graphic graphic
NEW YORK (CNNfn) - Wall Street's reopening on Monday sparked a record volume of 401(k) transactions, according to a tracking index from Hewitt Associates.

The Lincolnshire, Ill.-based human resources consulting firm said as markets resumed trading after last week's terrorist attacks, participants in 401(k) plans reacted by transferring their money out of the large cap U.S. stocks and into more conservative asset classes such as bonds.

  It's difficult to ignore the noise, but investors should stay put.  
  Joel Bruckenstein, CFP
Global Financial Advisors
"It was an emotional knee-jerk reaction," said certified financial planner Joel Bruckenstein of Global Financial Advisors. "People often sell in panic."

Hewitt's 401(k) index, which tracks a daily transfer activity of about 1.5 million U.S. employees with $71 billion in assets, indicated that Monday's activity was nine times more than the normal level.

"We've noted over the past year that 401(k) participants' reaction to the bear market has been best characterized as "hands off," said Lori Lucas, a consultant at Hewitt. "Clearly, participants responded to last week's tragedy by moving their assets from equities to fixed income."

But Bruckenstein said, "it's difficult to ignore the noise, but investors should stay put."

He said 401(k) plans are designed to ride out the tough times, and participants should be in for the long term.

Bruckenstein advised that investors should find a plan that is suitable for them, and even when things get tough, they should "stick with the plan." graphic


Some 401(k) plans have "life strategy" funds that do the work for you - Dec. 11, 2000

Tips to be smarter about your money - Dec. 8, 2000