Do you feel like your 401k is at ground zero? You're not alone.

The volatile markets have delivered many of our retirement plans to the same place: shambles. Sure, we may have traveled from different directions:

1. Maybe you saw the markets plunging and moved your 401k holdings out of the stock markets. Now you're sitting on a load of conservative investments even though retirement is years off.
2. Maybe you didn't have the right investment strategy to begin with—and the markets harshly told you so.
3. Maybe you liked your investment strategy but the volatile markets threw your asset allocation strategy so out of whack that you're scared to rebalance back to your plan.
4. Or maybe you just got your first 401k and you're nervous about getting involved with these crazy markets.

Never mind where you started. It's time to snap out of that dazed paralysis and start looking—and moving—forward. Here are a few factors to consider while rebuilding your 401k plan.

Now is as good a time as any

"It's hard to predict what's going to happen," says Alyce Zollman, a financial consultant at Charles Schwab. She suggests you forget trying to time the markets and instead stick to a long-term, well-diversified investment strategy.

Fortunately, right now is a pretty good time to start building that well-diversified investment plan. Buy low and sell high is the mantra of the investment world. While the stock markets may not have hit their bottom, they sure are low, based on historical measures. And these steep sell-offs have created many buying opportunities.

One thing is certain: you have a 100 percent chance of missing a market recovery if your retirement money is sitting on the sidelines. That fact alone should encourage you to start plotting your entry back into the market with a smart investment plan.

Want to wait until you're sure the markets hit bottom? Jason Zweig at The Wall Street Journal says you have a better chance of seeing a unicorn.

Ease in

If your current holdings are pretty different from your desired strategy—then you might want to transition slowly into your new plan.

Zollman notes that building a position over time can decrease the effects of market swings. By gradually moving your money into riskier investments, you'll avoid the chance of investing all your money right before the markets drop dramatically.

Known as dollar-cost averaging, this technique involves putting a certain dollar amount to work on a regular basis for a set period of time. For instance, you might give yourself six months to get to your desired long-term strategy. During that six month period you could make monthly contributions of, say $300, to the new investments you want to fund. The notion of dollar-cost averaging is that your set amount of money will buy more of a mutual fund when its price is down and less when its price is high, thereby lowering the overall base cost of your investment.

The structure of 401k plans makes dollar-cost averaging fairly easy. Most plans allow you to adjust the asset allocation of your current holdings and of your new monthly 401k contributions separately. This means you can leave your current investments alone and change the allocation of your new 401k contributions so that over time your portfolio will reflect a smart, well diversified, long-term plan. Or, if your current holdings are very different from what you'd like them to be, you can update your current asset allocation to get you part-way there and then use your monthly 401k contributions to realize your full investment strategy over time.

The other nice thing about making these changes in your 401k plan is that there are no tax consequences. Since they are tax-deferred accounts, you don't have to pay taxes when you move in and out of funds.

Reassess risk

The spectacularly horrible returns of many investment funds over the last few months remind us that asset classes can swoop as low as they soar. It's fun to ride investments up, but you should only invest in them if you can also handle the ride down.

When figuring out your investment strategy you need to figure out how much risk your stomach and your lifestyle can handle.

There's no straightforward way to figure out your appetite for risk. You might start by asking yourself if you order the oxtail or stick to the spaghetti and red sauce. It's likely that your tolerance for investment risk resembles your predisposition for risk in general.

More important than evaluating your tolerance for r isk, you must also consider your capacity for risk. If your retirement is 20–30 years off, then your risk capacity is probably high. You can afford to increase your allocations to riskier stock markets and ride them through their ups and downs. But if you'll need a good chunk of your cash in the next few years then you should protect your assets with less risky investments like cash and bonds. Your capacity for risk is likely low since you probably can't afford to be in the middle of a down market when you look to cash out.

This asset allocation calculator helps measure your risk capacity. It gives you an idea of what your investment plan should look like depending on your investment timeline.

401k Resources

Do you need help figuring out what your investment strategy should look like? Check out these retirement resources:

Related Calculator: Asset Allocation

Related Article: Now's the Time for a Portfolio Do-Over

Related Article: Retirement Advice for My Family and Friends

Related Guide: Questions to Ask When Choosing a Mutual Fund