New York After the stock market began plummeting this past week, Mary Mahon and her husband took a look at their retirement accounts and were dismayed by what they saw.
"We're taking hits," said Mahon, a project coordinator for Action Marketing Research in Minneapolis.
But the Mahons, who are in their 40s, are holding on to their mutual funds, convinced their savings will recover before they stop working.
"You can't sell when it's low and buy when it's high. All you do then is lose," Mahon said. "We're hanging tough. We're diversified, and we're in this for the long haul."
Even before the Sept. 11 attacks on the World Trade Center, weakness in U.S. stock markets had pulled down the value of the estimated $11 trillion that Americans have saved for retirement.
The selloff on Wall Street following the attacks has taken a further toll on 401(k)s, Individual Retirement Accounts and other savings plans, leaving many Americans worried about their future.
But while some savers have gotten rid of their stocks and equity mutual funds, most appear to be following the same strategy as the Mahons watching and waiting.
Bill McNabb, head of Vanguard's institutional investor group, said his company had been hearing from worried investors.
"We were fielding a lot of calls from people saying, 'Talk to me about the market. I'm getting a little nervous,' " McNabb said.
Vanguard agents, he said, reviewed the basics of investing with clients the importance of diversifying holdings, the problems of trying to time the turns in the market, the need to think long-term.
McNabb said most of Vanguard's customers "are not doing anything" for the moment, although there has been a slight shift toward purchases of bond funds rather than equity funds.
Dallas Salisbury, chief executive of the Employee Benefit Research Institute in Washington, said he had been encouraging workers to stay invested.
"When you're talking about retirement funds, you've got a time horizon of anywhere from 20 to 30 to 40 years," Salisbury said. "Even if you're 65, the odds are you or your spouse will be around in 20 years."
That makes short-term market fluctuations less important, he said.
Salisbury added that investors who continue to buy stock funds are getting them at a reduced cost per share in a down market. "When the market turns around, you'll have more shares to increase in value," he said.
Some savers were prompted by the nosediving markets to make what they hope will be strategic changes in their accounts.
Laura Peet, a 38-year-old New York marketing consultant, had been thinking for a while about consolidating and reallocating the money in her IRA accounts as well as in stock and mutual fund portfolios.
After "trying not to look" at what was happening to them in recent days, she called her broker and decided to sell many of her holdings on Friday.
"It will be back in the market on Monday, but in a better combination of growth, value, aggressive and conservative investments," she said. "I absolutely believe the market is going to come back, and I'll be in it for the long-term."
Peet said she wasn't worried about the losses she probably incurred Friday, saying "that should help me at tax time" when she can write them off.
New York financial planner Gary Schatsky notes that savers focus closely on their accounts when there are major ups and downs in the market.
"Three years ago, when tech stocks were soaring, I had to beg some of my clients not to put everything into the market," Schatsky said. "Now they want to know why they shouldn't pull everything out and go 100 percent in cash."
The answer, he said, is to stay diversified: "Stock is part of that. So are bonds. So is real estate. And cash."
He suggested diversification also means have some savings in tax-sheltered accounts like IRAs and some in taxable accounts, where investors can take a chance on riskier stocks and stock funds and write off losses if necessary.
A real problem for investors who want to flee the stock market or stock funds is that while there are a number of risk-free alternatives, most pay so little in interest that they barely stay ahead of inflation.
The stock market over time has produced a return of 7 percent a year. Right now, a one-year bank certificate of deposit yields about 3.20 percent, while short-term Treasury bills and money market funds are yielding below 3 percent.
Still, for some savers, security is paramount. They'd sooner have a 3 percent annual return from the bank than lose 14 percent in a week the amount the Dow Jones industrials fell this past week.
Lynn Schwartz, owner of the Newsmaker Group public relations firm in Manhattan, watched the Dow drop more than 684 points on Monday. When it continued to fall on Tuesday, she called her financial adviser.
"I rolled about 80 percent out of stocks and mutual funds into money market funds," she said, adding that it's going to stay there until the market has stabilized
"A 3 percent return and preserving my principal is fine with me," Schwartz said. "I feel safer. I feel more secure."