A message from BlackRock’s President Rob Kapito on navigating volatility
For those who are financially able to stay invested, history shows that people do best when they take a long-term view.
Market volatility can startle even the most experienced investors. No matter where you are on your retirement path, it's important to keep the following in mind when deciding whether or not to remain invested.
Investors who can continue contributing to their retirement have the potential to take advantage of market recoveries. For example, those who stayed in their plan from 2007 through 2013 saw their average account balances increase by 86%1.
For illustrative purposes only. Past performance does not guarantee future results.
New contributions can take advantage of attractive pricing as the markets recover.
Historically, market rebounds are concentrated in a few distinct spurts. We expect the market to rebound again, but we can't know exactly when that will happen.
Performance is hypothetical for the period from 3/2/2000 to 2/28/2020 and for illustrative purposes only. Past performance does not guarantee future results.
Consider the above chart, which shows the hypothetical return of $100K invested in the S&P 500 Index from March 2000 to February 2020 (yellow bar). To the right, you can see the impact of having missed top-performing days. Staying invested earned more than double that of the portfolio which missed the top 10 performing days.
Here are some actions you may want to consider taking - and avoiding – when markets are volatile.
Historically, stock market downturns are often followed by a period of positive market performance.
Source: Morningstar as of 2/28/20. Returns are principal only not including dividends. U.S. stocks represented by the S&P 500 Index. Past performance does not guarantee or indicate future results. Index performance is for illustrative purposes only. You can’t invest directly in an index.
Every major decline from 1987 through 2020 in U.S. equities has reversed itself between 21% and 68% within the following year.
We recognize that those who are experiencing significant and immediate financial distress may need to turn to their retirement plan for relief.
For those thinking about taking this course of action, here are some things to consider in advance:
For those who are financially able to stay invested, history shows that people do best when they take a long-term view.
RETIREMENT CONCERNS
Some risk factors that could lower your retirement savings