On Diving Into a Down Market

Investing at a discount is the silver lining in this cloudy market.

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This may sound counterintuitive to those who haven't had "buy low and sell high" drilled into their heads, but a down market signals a great time to invest.

Says Carmen Wong Ulrich, host of CNBC's "On the Money" and blogger: "Don't think you're diving into a pool with no water; what you're really doing is diving in and buying low," she says.

She adds, "You shouldn't look at [your balance] every day.... Try to understand that the loss you're seeing is what you have in your hand, but it's not disappearing."

Here's what she had to say specifically about 401(k)'s:

"Some younger investors are scared because they see their 401(k)'s shrinking, and they didn't have a lot in the first place. They're asking, 'Why should I contribute?' and 'Shouldn't I pull all my money out and put it in cash?' These are people with 20, 30, or more years to retirement." If you're in that boat, Ulrich says, "You're going to ride out quite a few more recessions. That's part of how the market works. But if you're contributing over time, you're using your 401(k) for what it's built for: long-term savings."

Ulrich's not a fan of all-stock portfolios, but she says those in their 20s can handle 90 percent in stock funds. "But if this all makes you nervous, you should be 20-25-30 percent [bonds]. Factor in how much time you've got and how upset this makes you," she says.