After the Dow Jones industrial average on Monday experienced its biggest one-day point drop in history, it’s natural to wonder whether investing your 401(k) contributions in stocks is a little like throwing money down a black hole. Then again, the market mostly recovered the next day, so maybe sitting on the sidelines is the unwise move.

Knowing what to do in such a topsy-turvy market is tough. So I asked a handful of financial advisers how they’d recommend that investors from various life stages build their retirement accounts every month. They obliged, so long as I promised to remind readers that every investor is unique, and that one 65-year-old’s portfolio can look dramatically different from another’s depending on risk tolerance and circumstance. This week, here are their tips for investors who have less than five years until retirement. Next week, I’ll share their strategies for younger workers.

Harrison Grodnick, principal with Minneapolis Portfolio Management Group, says his recommendations for a 65-year-old don’t vary from what he’d suggest for someone much younger. “You need to have a portfolio that’s growing to outpace that loss of purchasing power.” Grodnick considers bonds “the most overpriced asset,” considering their current low yields. As for cash? “It’s like throwing in the white towel” and accepting a declining currency and inflation eating away at your money.

That leaves stocks. Grodnick prefers individual stocks over mutual funds and is a value investor in search of companies that are undervalued with unique goods and services that aren’t easily duplicated.

These days, Grodnick likes the energy sector. “In this hurricane, everyone’s gotten wet, and I think a lot of these energy companies have gotten unfairly beaten up.” He’d still steer clear of the financial sector.

If he had to pick a mutual fund, he said he would look for an all-cap value fund, which means a fund that invests in cheap companies of all shapes and sizes. “Wherever you can find a dollar [on sale] for 50 cents … opportunity is opportunity.”

Martha Pomerantz, cochair of the Investment Committee for Lowry Hill, a Minneapolis firm advising wealthy families, says that whether investing in stocks, bonds or cash, those nearing retirement should not stop their 401(k) contributions during this tumultuous time, because that would mean giving up the tax benefit and possibly matching money from their companies. Plus, many investors need to sock away as much money as they can while working to make up for lost time. Nervous Nellies should step away from the computer and turn off the TV.

“I look at my money once a year and rebalance,” said Pomerantz of her retirement fund. Pomerantz also points out that those who have a strong stomach will find great buys in stocks. “In some regards it’s the absolute ideal situation” for stock-buying, she said. Can’t stand the heat? Then look for a fund option designed to preserve principal, such as a money market fund that “dampens volatility.”

Nate Wenner, the Financial Planning Association of Minnesota’s president-elect and an adviser with ­Wipfli Hewins, says that typical 60-something retirees in good health should invest 40 to 60 percent of their contributions in stocks. “Most people aren’t all of a sudden selling their portfolio in retirement,” he said, meaning that some money will have years, if not decades, to recover from today’s slump.

As an adviser, Wenner hasn’t changed his strategy just because the market’s looking rough. He considers it his job to make sure clients don’t veer off course because emotions are steering the boat. If recent events have forced a client to realize that she can’t withstand the market’s ups and downs as well as she imagined, however, taking a more conservative approach is appropriate.

For someone with half in stocks, half in bonds, he’d suggest 25 percent in a large company stock mutual fund, 10 percent in a fund investing in small companies, 11 percent in international stocks and 4 percent in a fund that looks for opportunities in emerging markets. Split the bonds two-thirds in ­investment-grade corporate bonds and government bonds, leaving one-third in a mix of high-yield and international bonds.

Kara McGuire • 612-673-7293 • kmcguire@startribune.com