Enter our “Smart Money” contest for a chance to win a $100 gift card »

Answer these questions to test your financial IQ »

Learn how to change the way you save »

So you finally peeked at that 401(k) statement and your retirement loot is steadily losing ground. For many, just opening that quarterly statement can be daunting. The hard part is over. To allay your money concerns and figure out what to do with your stash, ESSENCE.com spoke with Mellody Hobson, president of Ariel Investments L.L.C., about minding your money.

ESSENCE.COM: Our readers are asking a lot of questions about their 401(k) plans. When is the right time to review them and should investors just leave those market assets alone?
MELLODY HOBSON: You absolutely want to leave those assets alone because market timing does not work. Meaning, trying to time when to take money out and when to put it back based on how the market is doing is a big, big mistake. It's a losing game.

ESSENCE.COM: But for those who are feeling a little bit less comfortable with the volatility that's going on, should they switch some assets around? Even if they don't take the money out?
HOBSON: You want to have an asset allocation strategy that you preset that keeps you diversified across a number of investment options. By being diversified, you don't feel such a dramatic swing [when the market has significant ups and downs]. See chart below.

ESSENCE.COM: So you shouldn't be afraid to let your investment ride?
HOBSON. It's not even a question of being scared. You have to. That's the only way to succeed in the stock market. You have to take a long-term view and you have to understand that there have been many, many shocks to the market over the years, but the market recovered because the underlying fundamentals of the U.S. economy can be counted on.

ESSENCE.COM: What would you say to ESSENCE.com readers about the importance of participating in their 401(k) plans?
HOBSON: Participating in your company's 401(k) is a "no brainer." Many companies have some kind of company match. And you can consider that free money. If you work for a company, you put in a dollar and they put in 50 cent for every dollar you put in up to a certain amount, that is a 50 percent return right off the bat—and you haven't even done anything.

ESSENCE.COM: Homes are the largest single asset of most African- Americans. Why do you think there wasn't a provision in the original bailout package to help individual homeowners?
HOBSON: Because the most important thing is to get the credit markets unfrozen. If there is no credit, nothing happens. Our companies can't pay their workers. The value of an investment will deteriorate dramatically. You can't borrow any money. I heard Warren Buffet say something that I thought was very smart, he said: "Credit is like oxygen—you don't know you need it until you don't have it."

ESSENCE.COM: Having said that, what do Black women need to do in the meantime?
HOBSON: "For the individual who is struggling to pay their mortgage, they have to get aggressive with their lender and really push extraordinarily hard to renegotiate the terms. And I know it's not easy. These days, just to get a mortgage you need almost perfect credit. But I think that banks have sobered up pretty significantly about the reality that this country is in. Now, it's important to also keep in mind most homeowners are paying their mortgages on time and are doing fine.

ESSENCE.COM: The stock market is on sale right now. Should I invest now?
HOBSON: Yes, but do it a little bit at a time. Don't put in a huge amount of money all at once. I would do what's called dollar cost averaging. Put in a little bit each month. So if you were going to invest maybe about $10,000, I might do $2,000 a month for the next five months. But I would absolutely consider this a once-in-a-lifetime buying opportunity.

ESSENCE.COM: How long do you think it'll take for us to get through this financial crisis?
HOBSON: No one knows. I do believe, from our perspective, that the worst is over. I do. That doesn't mean that it's going straight up from here. We will have good and bad days."

ESSENCE.COM: As African-American women, what do we need to do more of in terms of our finances?
HOBSON: Save more. It's unquestionable. All the data that we have shows that we're not saving as much as our White counterparts at the same income and education level.