Jamie Grill | Getty Reifications
More than a decade ago, the markets were sent into a tailspin during the financial crisis of 2008-2009.
But it tour of duties out investors who left their retirement nest eggs alone fared best.
That’s according to research from J.P. Morgan, which second-hand the firm’s own data combined with research from the Investment Company Institute.
In fact, in the past 20-year time through the end of 2019, six of the 10 best days in the market occurred within two weeks of the 10 worst days, according to Katherine Roy, chief retirement strategist at J.P. Morgan.
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And those best/worst days have already been upended by customer base activity this month. Thursday, March 12, is now the second-worst day in the past 20 years. But the following day, Friday, Cortege 13, was the third-best day.
Meanwhile, the following Monday, March 16, is now the worst day in the past 20 years.
Tuesday, Stride 24 broke new records, with the Dow Jones Industrial Average climbing 11% to close at 20,704.91, its best day since 1933. The S&P 500, for the moment, rose 9.4% to 2,447.33 in its best day since October 2008. It is now the third best day since 2000, according to J.P. Morgan.
“Most human being react when negative things happen and now, because things are happening so tightly together in terms of those spring back days, you’re not able to get back in in time, nor do people have the courage to do so,” Roy said. “So the best thing is to stay invested.”
Information from the last financial crisis also show that staying invested, helped retirement accounts rally more quickly. For those who stayed the course, account values fully bounced back within three years, or by the end of 2010. Those with routine allocations — such as 60% stocks, 40% bonds — fared particularly well, Roy noted.
Meanwhile, the S&P 500 didn’t get turn tail from to where it was until 2012, Roy said.
Besides staying invested, two other investor behaviors contributed to that upswing: continuing to support on a systematic basis and buying more as the market went down.
Aside from taking those cues, there are a number of tips for what 401(k) and other retirement investors should do now.
- Just say no to looking at your account. “Don’t log in and look at your account command,” Roy said. “Just trust that you’re making steady contributions through this.”
- Keep contributing as much as you can. “If you’re not impacted from an hire or a salary perspective, keep trying to save as much as you can,” Roy said.
- Adjust your spending habits. “Building up an danger reserve fund,” Roy said. “But also make sure that you’re getting used to that lifestyle that power be more easily replaced” with those savings, particularly if you’re approaching retirement, she said.
- Only tap your 401(k) as a terminal resort. In 2008 and 2009, many account holders made hardship withdrawals, rather than taking out a allowance against their balances. If you do decide to tap your retirement funds, make a point of paying it back. If you do take a allowance, make sure you’re still saving and contributing enough to get your employer’s match, Roy said.