To me, that's a reason not to stop but to step up contributions, to make up for possible low investment returns. It's also a reason to learn more about our default 401(k) diversified fund, including how much it invests in stocks and bonds (percentages can vary significantly from fund to fund).
"A basic question to ask depending on our age is, can I afford to lose what I have saved?" said Dallas Salisbury, president and CEO of the Employee Benefit Research Institute. If the answer is no, move to less risky investments, he recommends. Salisbury argues that tax-advantaged, payroll-deduction plans such as 401(k)s, particularly those with matching employer contributions, have been "extraordinarily successful" in getting Americans to save much more than they would have saved on their own.
Over the long haul and particularly for young people, diversified funds make sense. If you can't stand losing principal, invest in stable-value or money market funds. If you want some money in stocks and bonds but not all, divide your contributions between the "default" fund and a stable-value or money market fund. Invest in a way that makes sense to you, not just rely on rules of thumb.