Asset & Wealth Management in Allentown, Pa
"I learned that courage was not the absence of fear, but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear."
As the stock market falls in response to the spread of Coronavirus, it can seem incredibly rational to move your 401k and other investments to the sideline. If you’re like many people, your instincts say to shift the balance from stock funds into the cash fund “until things get better.” As humans we are emotional by nature and panic is a natural response as fear continues to fester amongst investors. But is “cashing in” your 401k account the right move?
According to Louis S. Harvey, the answer is “No.” In the last 35 years there have been 10 periods of market crisis that resulted in 70% of lost returns. The “prudent response” was to continue investing as prior to the disruption as history shows quick recoveries.
What is needed now is not panic selling, but perspective and patience.
For some perspective, this is not 1929, 2001 or 2008 for two very important reasons:
Patience is required to understand that markets have always recovered from crisis, both small and large. It doesn’t happen overnight, but every bear market has recovered to see stock market indices reach new all-time high levels.
Rather than panic, Magellan Financial suggests these proactive steps:
If you are saving for retirement but not close to retirement:
If you are saving for retirement and close to retirement:
Adjust your savings and Asset Allocation based on your updated investment and retirement plan.
There is never an all-clear signal in bear markets (nobody rings a bell). As investors we need to be brave and overcome those natural fears that come with market disruptions. Prudent investing requires the patience and perspective to stay invested through both the good times and the bad times.
Preparing for unexpected – but common – retirement events such as a sharp market decline is one of the key lessons of good retirement planning. Sensible strategies like having an emergency fund, diversifying your investments, and ensuring that your retirement can help you prepare for most contingencies.
Have no plan or need help with your investment and retirement plan? Not sure if your current portfolio matches it? Contact us for successful investment management!
MAGELLAN FINANCIAL, INC.
1605 N Cedar Crest Blvd #111
Allentown, PA 18104 USA
Toll Free: 1-888-437-5650
Fax: 610-437-5654
Email: Rob.Cahill@WFAFiNet.com
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