How you can save your 401(k)

If you have more time, I would recommend the opposite approach: Take advantage of the extra-low prices of foreign equities by rebalancing into them. And continue to give them a significant role to play in your portfolio, because currency cycles are like a very slow-moving pendulum, and years of buying low will give you big profits to harvest the next time it swings back, when you'll be able to take gains there to plow into on-sale U.S. positions.

Double down when you can

Instead of cutting back on 401(k) contributions, consider boosting them, at least temporarily, to take advantage of prices that, when the bear market ends, will clearly be bargains.

"The dollars invested today will have a greater return than the dollars you invested when the market was higher," notes Dylan Ross, an adviser with Swan Financial Planning in East Windsor, N.J. "You'll actually be adding buoyancy to your portfolio; that's how to rescue your 401(k)."

Oh, the humanity!

If you are so panicked you're thinking about yanking money out of your 401(k), please, please think again.

"The question I'd ask them is: What will they do with the money? If they are really worried about financial collapse, I'm not sure what a safe haven is in that scenario," says Michelle Fait of Satori Financial in Seattle.

Pull money out of your 401(k), and you're immediately liable for taxes on it, plus penalties, unless you are 59 1/2 or older. And when markets recover -- and they will, because again, this time it ain't different -- you can't put it back in.

Additionally, the envelope of federal regulation that surrounds 401(k)s actually makes them more secure than bank accounts. In bankruptcy, for example, creditors can't go after 401(k) assets.

Oh, the opportunity!

If you think things are gloomy now, think about the Great Depression, when the unemployment rate was about 25%. Trent Porter of Priority Financial Planning in Fort Collins, Colo., says, "I like to use the example of John Templeton, who bought stocks during the Depression and quadrupled his money in less than four years."

One lesson Templeton taught was that the greatest investment risk is taking too little of it. Cash and bonds barely maintain purchasing power after taxes and inflation. Stocks, on the other hand, appreciate an average of 50% in the first three years after bear markets end. You can't earn those rewards if you're not in the game. That is the reason today's sellers can find buyers. One of whom, by the way, is Warren Buffett, perhaps the only modern stock investor who can be compared to Templeton.

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It's tough to keep your head when nobody else is, but that is where your brain is, and you'll need it tomorrow. And you'll need your nest egg. Tending it is painful right now but is all the more necessary. If you don't, when you're in your 70s, you'll be investing in cat food, because that's what you'll be having for dinner.

Meet Tim Middleton at The Money Show

MSN Money's Tim Middleton will be among more than 50 investing experts gathered in the nation's capital Nov. 6-8 for the fourth annual Money Show Washington, D.C. Just days after the election, this elite group will present more than 170 free workshops to help you prepare for changes in the political landscape. Admission is free for MSN Money users.

To register, call 1-800-970-4355 and mention priority code 009554, or visit the Money Show Washington, D.C., Web site.

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