I braved my last 401(k) statement yesterday and lo and behold, what to my wondering eyes should appear but a fully reconstituted 401(k) balance!

It got pretty ugly around November of last year, and I quite frankly stopped looking.

But that doesn’t mean I ignored it completely. I ramped up my contributions around January by another 3% of my salary, so I could make the most of the downturn.

That simple strategy – stay put, and invest more – brought the value of my retirement savings past the pre-crash level in just 10 months.

As The Dividend Growth Investor outlines, since 1956 it has taken on average 2.8 years for the market to recover from a bear market loss.

To be fair, some of my recovery is due to contributions to the plan, but those contribution also magnified the gain from the stock market and that’s the point. Increasing your investment in broad-based funds or ETF’s when the market is down amplify the eventual recovery. Think of it as extra fuel that ignites when the market turns around and increases the velocity of the recovery.

Financial rocket science, it’s a beautiful thing.

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