NEWTON —Edward Jones, a financial services company with an office in Newton, expects daily stock market volatility to persist until new coronavirus cases begin to slow, but added that investors should find optimism in these facts: prior to the epidemic, unemployment was near a 50-year low, with solid wage growth; there was an uptick in the housing market, which may accelerate due to declining mortgage rates; and the Federal Reserve has cut short-term interest rates back near 0 percent.
For investors wondering what to do now, financial advisor Terence Wynne offers these suggestions:
First, remember why you're investing.
"With the market decline, people will be tempted to change their investment strategies," Wynne says. "But they need to keep in mind that most of their financial goals, such as a comfortable retirement, are long-term in nature — a lot longer-term than the shelf life of the coronavirus. If investors have established a long-term strategy that's appropriate for their needs, they should stick with it, no matter what today's headlines are."
However, Wynne does suggest that individuals who are particularly concerned over the current results of their investment statements might want to evaluate their risk tolerance.
"If you are truly losing sleep over what's going on in the markets, it's possible your portfolio is positioned too aggressively for the amount of risk with which you're comfortable," Wynne says. "In that case, you should work with your financial advisor to see if you need to adjust your investment mix to include more fixed-income securities, which can provide some downside protection, but you'll be making a trade-off, because you'll also be affecting your long-term growth potential."
Finally, Wynne says, now might actually be a good time for investors to consider actually adding to their portfolios.
"Right now, many stocks are at their best values in more than a decade," Wynne says. "If you need to rebalance your portfolio, this could be a time to do so."
Ultimately, Wynne says, investors need to realize that, while we are in somewhat uncharted times, the temptation to panic should be fought.
"The best thing all of us can do is look past short-term downturns and maintain the discipline to keep investing in all types of markets,“ he said.
Edward Jones, a Fortune 500 company headquartered in St. Louis, provides financial services in the U.S. and, through its affiliate, in Canada.