Offer your thoughts or opinion on the input financial query or topic using your financial background.

IRA contributions in a bear (bad) market: Should I build up cash savings instead?
You have heard the old adage "Buy low, sell high", right? That sounds so obvious that you'd have to wonder why they would ever bother coining such an expression. It should rank up there with "Don't walk in front of a moving car" on the Duh scale of advice. Well, your question demonstrates exactly why it isn't quite so obvious in the real world and that people need to be reminded of it.  So, in your example, the stock prices are currently low (relative to what they have been). So per that adage, do you sell or buy when prices are low? Hint: It isn't sell. Yes. Your gut is going to tell you the exact opposite thanks to the fact that our brains are unfortunately wired to make us susceptible to the loss aversion fallacy. When the market has undergone a big drop is the WORST time to stop contributing (buying stocks).  This example might help get your brain and gut to agree a little more easily: If you were talking about any other non-investment commodity, cars for instance.  Your question equates to.. I really need a car, but the prices have been dropping like crazy lately.    Maybe I should wait until the car dealers start raising their prices again before I buy one. Dollar Cost Averaging As littleadv suggested, if you have an automatic payroll deduction for your retirement account, you are getting the benefit of Dollar Cost Averaging. Because you are investing the same amount on a scheduled interval, you are buying more shares when they are cheap and fewer when they are expensive. It is like an automatic buy low strategy is built into the account. The alternative, which you are implying, is a market timing strategy. Under this strategy, instead of investing regularly you try to get in and out of investments right before they go up/drop. There are two MAJOR flaws with this approach:   1) Your brain will work against you (see above) and encourage you to do the exact opposite of what you should be doing.   2) Unless you are clairvoyant, this strategy isn't much better than gambling. If you are lucky it can work, but because of #1, the odds are stacked against you.