The stock market trauma: What COVID-19 means for your 401(k)

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Don't panic? Here's what coronavirus means for your 401(k), and what history says about when stocks will recover

Dan Keady, the chief financial planning strategist at money manager TIAA, has some good news and some not-so-good news for all those watching their retirement savings evaporate before their eyes.

And if you’re still tucking money away every month in your 401, events like this can actually help your retirement planning, he adds. You’re getting more stocks for your money every month, because they’re a lot cheaper. He added: “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.”He added: “Fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

When Buffett wrote his article, the Dow was just under 9,000. On the one year anniversary — Oct. 16, 2009—it closed at…9,871.“[T]hose investors that panicked in 2008/09 and went to cash missed much of the recovery,” notes Liz Windisch, a financial planner at Aspen Wealth Management in Colorado. In recent days, she says, she’s been reminding clients “stocks are a long-term investment, [and] if you sell now you are locking in your losses.

“So,” he continues, “the market shrugged off the pandemic, even as it killed 675,000 Americans, then took off big-time when it was winding down.”

 

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