AI stock swings could affect your 401(k). Here’s what retirement savers need to know

AI stock swings could affect your 401(k). Here’s what retirement savers need to know. Retirement savers may be affected by swings in the artificial intelligence trade. Here is how to assess the risk without making a rash move.

What happened

Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenuKey PointsRetirement savers who do not own an artificial intelligence-themed fund may still be affected by swings in AI trade. Even if you do not own an individual AI stock or AI-themed fund, the swings may still affect your retirement savings. Experts say investors nearing or in retirement may want near-term spending needs in relatively stable assets, such as cash and bonds, while allowing longer-term growth investments more time to recover from market swings.

For the millions of workers who have a portion of their retirement savings invested in an S&P 500 index fund, that means a relatively small group of mega-cap companies can have an outsized effect on stock returns. What young expats need to knowInheriting a home can leave siblings with financial headaches — how to avoid mistakesIs the K-shaped economy ending? Finance pros weigh inMillions of people with disabilities may be missing out on this little-known savings toolYou can't 'borrow your way out of debt,' expert says, but more people are trying"A slowdown would represent a pullback in some of the AI stocks or the large-cap technology stocks that make up a large portion of investors' portfolios today," said Zachary Evens, a manager research analyst for Morningstar, because of the concentration within S&P 500 index funds that can make up a large share of their 401(k).

Those funds typically hold a mix of stocks and bonds, and gradually become more conservative as investors approach retirement.

The wider picture

" If the AI buildout slows or investors become less enthusiastic about the potential payoff, experts say, retirement savers could see more market volatility. What young expats need to knowSharon EppersonDoes Medicare pay for long-term care? Skip to main content Skip to navigation Everything you need to know for NFL Week 2: 15 games on deck, 15 previews from our reporters and expertsNew York Giants8hNFL Nation, +4 MoreNFL Week 2 buzz: QB questions in Seattle, Minnesota and Atlanta? " — Courtney CroninStat to know: The Bears need 37 points to break the NFL record for most points in a team's opening two games, currently held by the 1968 Raiders (95). — ESPN ResearchBold prediction: Vikings QB Carson Wentz will throw multiple interceptions.

Regardless, the high profile claims have caused concern – here's what we know. In a post on X, external, Altman said there was a need to pace development but added "when we talk about 'pacing' we do not mean 'stopping'. The average 401(k) investor may own AI stocks in an S&P 500 index fund or a target-date fund. Financial advisors recommend reviewing holdings and rebalancing if your portfolio has drifted from your intended asset allocation for your retirement goals.

What has been reported

More from Your Money:Here's a look at more stories on how to manage, grow and protect your money for the years ahead. Still, when a few stocks grow to represent such a large share of the index, experts say, investors should understand the concentration risk that can come with broad-market investing. Their stock allocations can still include the S&P 500 index and other funds with exposure to AI-linked companies. "Even if there is some volatility in the AI play, you've got a whole portfolio of other investments out there.

"Many diversified 401(k) funds also own other stocks and bonds. S. stock fund, an S&P 500 index fund or a target-date fund may still have substantial exposure to the largest technology companies. Check whether your exposure to a particular stock, sector or fund has grown beyond your desired asset allocation. "You might be overweight in large-cap stocks right now because of the run-up in the market," Abrams said.

What happens next

The right time horizon and mix will differ depending on your retirement goal. The bottom line: Know what you own and the risks you are taking. Don't let short-term, AI-driven market volatility dictate a long-term decision about your retirement savings. Seattle Seahawks2dJeremy Fowler and Dan GrazianoJoey Porter Jr. 's future in Pittsburgh? 'Don't know if he ever puts on a Steelers uniform again'Pittsburgh Steelers8hBrooke Pryor and Jeremy Fowler'It's not all on him': Titans remain patient with Cam Ward despite 'rough' openerTennessee Titans8hTurron DavenportWhy the Chiefs believe rookie class is key to AFC West5hNate TaylorCards' Marvin Harrison Jr. looking for big rebound game5hJosh WeinfussSaints QB Tyler Shough expects less jitters vs.

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The report has been compiled by The Daily Waves using information reported across cnbc.com, espn.com, bbc.co.uk. Details are presented according to the information available at the time of publication and may change as authorities, organisers or other relevant parties provide updates.