Wealth Management during the COVID-19 Period of Extreme Volatility

March 23, 2020 – Today we are sharing a chart that our investors might find useful during this period of extreme volatility.

Your 401(k) retirement savings and the investments you have selected are important to your long term investment strategy and financial well-being. The market declines experienced over the past few weeks are unsettling. Still, it is important to remember that the investment strategy you selected for your retirement is a long term strategy – despite your age or the stage of your career. In fact, short term trading has never proven to be beneficial in a comprehensive portfolio that is constructed to achieve your long term goals. At a time when our instincts might be to make significant changes to our portfolios, the best course of action is to remain disciplined and remain invested so that you can participate in the inevitable recovery.

You should ask yourself, is this money that will remain invested for the next 5, 10 or 15 years, while working or even in retirement? If it is, selling into the decline will limit your ability to recover recent losses. Going further, take a moment to review peak to trough market declines going all the way back to the Great Depression. In addition to reviewing the magnitude of the loss and of greater importance, look at the one year returns that followed those declines. You will see that, on average, the investors that take the long term approach and stay invested are ultimately rewarded for their investment discipline.

For more information, contact Thomas Emmerling at temmerling@dopkins.com.

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