For the last six months it has seemed like the sky is falling in on investors. Even the most battle hardened investors were no match for the waves of negative news; banks, insurance companies, car companies, bailouts and unemployment ruled the ticker. For most people, who only check their 401K quarterly, major losses hit them like a ton of bricks? There is nothing like seeing 40% or more of your retirement funds disappears to instill confidence in the market and our future. So what should you do now? Here’s some common sense investment advice to get you through.

First, take a deep breath. Don’t worry I’ll wait.

Ok, now that you are a little calmer let’s take a look at your situation. How are you investing? 401Ks are the most common vehicles for retirement savings these days, since most pensions have gone the way of the Dodo. No matter how bad the market is, keep putting money into your 401K. Most work places match a certain percentage of your investment. This is free money! Take advantage to the fullest amount.

The great thing about 401K is that they make investing simple. Most companies that run 401Ks have a variety of funds to match your needs. You can mix and match your risk profile and needs to get a good combination of funds.

But how do you know which funds to choose for your 401K?

The biggest factor in your investment plan is your age. The closer you are to retirement the more your portfolio needs to be in bonds and other investments that will provide you with fixed income during retirement. This is the most important investment advice out there.

The reason you want to be in safe, income-producing investments is because you need to safeguard your capital against down turns like the one we are going through right now. You won’t get the same rate of return, but your capital is not in jeopardy as much.

A lot of older investors got greedy and saw the return stocks were delivering the last couple of years and ignored this investment advice and loaded their portfolios with equities. But if the market takes a dive you can lose large chunks of money you will need in the next 20 years to live on. Now you’re faced with working longer, devoting huge amounts of income to savings or even getting a second job.

Not exactly how you pictured retirement, right?

If you feel the need to be in stocks at an older age, devote only 10% of your 401K or portfolio to them. This way you can cash in on any big upticks, but not be working the front door at Wal-Mart if it all goes south.

If you’re younger, say thirty and under, you can be almost exclusively in stocks. In no twenty year period since they have started keeping track has any other investment vehicle outperformed stocks. Yeah, you’re down right now but I guarantee that in twenty years you won’t be. As you get older you can change out more the more risky stocks (aggressive growth stocks) for safer investments (bonds).

The experts will give you the same investment advice. Companies like Fidelity offer targeted date funds, which automatically adjust, based on your retirement date. So if you tell them you plan on escaping the cubicle in 2040 then they will take your fund and slowly swap out equities for bonds and money market accounts as you get older.

This kind of fund is great for someone who doesn’t want to go through the trouble of picking out funds from the laundry list your company’s provider probably offers. I personally like to be more involved in picking the funds my money goes into, but that’s a personal preference. You can get in the trenches or set it and forget it.

I know you’re getting hit from every direction with how bad things are. Could it get worse? It’s possible, but for the most part we are at the bottom looking up. Follow this simple investment advice:
• Keep putting money away
• Take advantage of free 401K money
• Invest according to your age and goals

Follow these rules and I promise you won’t be donning the blue vest of a Wal-Mart doorman in your golden years.