Over the past weeks, global events related to the COVID-19 pandemic have disrupted markets and left many investors unsure of how their hard-earned savings will perform in the future. Especially with 2019 bringing healthy growth to retirement accounts, the recent stock market losses are difficult to stomach for anyone who places their money into investments. We understand the pain and distress that a down market can bring, but we also believe it is important to understand the facts and keep the big picture in mind. We want to bring you three “Perspective Checks” to help direct your outlook during this time, as you continue to look after your families and your futures.
Perspective Check #1: Big stock market swings can be scary. It’s important to focus on the big picture.
- Over the last few weeks, the stock market has seen large movements both up and down. For those that check your investments daily, this can feel like riding a roller coaster that keeps getting faster and steeper. It is critical to understand that these swings are not normal, and they will not last forever. Over the long term, volatility in markets will stabilize to a degree, and it is important to remain calm and disciplined when things are hectic. Your financial future is not determined by a single day or week in the stock market; it is determined by a long-term and self-controlled approach to investing.
Perspective Check #2: This is a health crisis, not a financial crisis.
- For those who lived through the recession in 2008, it is important to realize that this current crisis is very different. 2008 was a result of the financial system failing, while this is a crisis of public health. Although opinions may differ on the government response to COVID-19, one thing is clear: the government is actively trying to prevent a financial crisis. With the new stimulus package, we hope that government intervention may help to prevent this from becoming another 2008 scenario. We encourage you to avoid headlines likening this to 2008 or the Great Depression.
Perspective Check #3: This event will change the future, but the markets will normalize.
- No one can truly predict the future, and it’s anyone’s guess as to how long the COVID-19 pandemic will affect our society and our financial system. However, it is crucial to hold on to the understanding that markets, and perhaps, more importantly, life, will normalize. This could take a short time or a long time, but it will happen eventually. Human nature dislikes an unsure future, so patience and clear-headed thinking are most important right now. Don’t be tempted to make drastic financial decisions without consulting others.
As always, please contact us if you have questions or concerns about your specific financial situation. We are here to help.
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