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COVID-19 and Your Investments

You cannot turn on the media without hearing news of the Coronavirus. World markets have seen quite a bit of movement as fears of the virus spread. While we can’t specifically say when this volatility will end, we can tell you that the Watermark team excels at navigating clients through market turbulence. So, we’ve compiled 5 tips to help you steer through COVID-19 and your investments.

Keep your head

It’s so easy to get anxious with all that is happening around the world right now. While it’s important to check in on the news periodically, disconnecting is also important. In December we shared 4 tips to remain grounded with you. Keeping your head during these trying times is difficult. I think #2, Focus on your Health, is especially important right now.

Remember that market turbulence isn’t new

In May of 2008 Stewart Istvan, Chuck Magyar, and David Lyon banded together to build what’s become Watermark Stone Wealth. We’ve weathered these four instances of market turmoil together, we can get through this, too.

  1. The Great Financial Crisis (2008–2009)
  2. European sovereign debt crisis (2011)
  3. Oil crash of 2015–2016
  4. Q4 2018 interest rate panic

Did you know that these 4 periods share one thing in common? They were followed by dramatic rebounds.

Our friends at iA Wealth have created a report – The Storm Before the Calm. It shares some data-driven perspective on COVID-19 and your investments, and outlines why it makes good sense to keep a positive outlook. It also reminds us that when markets run into turbulence, we need to take a step back, tune out the noise, and regain our footing.

Invest periodically

A great way to respond to the market turbulence we’ve been experiencing is to start Dollar Cost Averaging – investing a fixed amount of money at regular intervals. Most of us get paid twice a month, why not set up an automatic withdrawal from your bank account on the day after you are paid? Putting your savings on repeat lets you ease into the market, ironing out the ups and downs of fluctuating prices.
Franklin Templeton created the below charts that outline the benefits of Dollar Cost Averaging:

Dollar Cost Averaging During a Rising Market

In a rising market environment, your investment is worth $1,819, from 79 units purchased at an average cost of $15.17. That’s less than the average unit price of $16.67 over the same time period without using DCA. Over time, you pay less per unit, while your investment continues to grow.”

Dollar Cost Averaging During a Volatile Market

In a more volatile market, you have purchased 244 units at an average cost of $4.93 and your investment is worth $1,949. Over time, your investment value increases using the DCA strategy.”

It is NOT the end of the world

There’s a quote from Anne of Green Gables that I remember in trying times – “the sun will go on rising and setting whether I fail in geometry or not”.

Our friends at Dynamic Funds shared the below chart with us in 2016. It’s amazing how many times we’ve turned to it for solace during unpredictable periods since then. You may want to have a look and then realize that no matter what COVID-19 brings, the sun will come up tomorrow.

It is NOT the end of the world
Source: Zyblock, Myles “U.S. Election Results: A Trumpocalypse?” Dynamic Funds 8 Nov. 2016.

Stick to your plan

When you create a financial plan you figure out two numbers; how much you need to save every year, and what rate of return you need your investments to achieve. Keep focused on your number, and it will be easier to filter out the noise. Meeting with your advisor periodically to make sure you are on track to achieving your wealth goals will help you sleep more soundly.

As we navigate this new world it’s important to stay connected. Know that we are here for you. Give us a ring if you have questions about COVID-19 and your investments, your financial plan, or if you are simply feeling anxious about how COVID-19 is affecting you. We’re here.

Watermark Stone WealthCOVID-19 and Your Investments

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