Today, I want to share three things with you in response to the volatile markets. The severity of COVID-19 and current market events are not to be taken lightly, but they should be put into perspective.
- Most investors don’t just own stocks – they also own bonds. This means that your investments with our firm have not suffered the same loss that the S&P 500, Dow Jones, or Nasdaq have. Bonds help manage the volatility in your investment portfolio.
- The media is not here to help you. The media is in the advertising business. Nothing draws more attention and sells more advertising than fear/greed mongering, volatility, and uncertainty. We are far better off focusing on things we can control, such as:
- Reducing Our Tax Bill
- Managing Exposure to Risk
- Monitor Spending
- Call a Friend
- Tell Someone You Love Them
- Volunteering Time to Those in Need
3. Things could be worse, and one day they will be.
A 30-50% drop happens less frequently, but it has happened in the past and will happen again at some point. The market does not go up every day or even every year. Our investment models and plans take these scenarios into consideration, but we do not attempt to predict when they will start and end.
Plan to Stay Invested– Trying to time the market is extremely difficult to do. Market lows often result in emotional decision making. Investing for the long-term while managing volatility can result in a better retirement outcome.
For further reading, see Vanguard’s report on Understanding Market Downturns.