COVID Outlook: Finances and More
Financial Lessons for the Future
The pandemic brought with it a whole new set of variables for investment opportunity. For example, some companies flourished in the glow of the stay-at-home culture this year, such as Zoom, Amazon and Netflix.4
On the day Pfizer announced its vaccine, the stock market rejoiced. The Dow Jones Industrial Average jumped 834 points, up 2.95%, while the S&P 500 rose to 1.17%.5 The vaccine news also boosted pharmaceutical stocks and industries hurt by the pandemic, such as cruise line, movie theater and airline stocks, as well as oil prices.6
The pandemic has been a good reminder that we cannot predict a global crisis or its potential impact on markets. It’s useless to try to time investment decisions, particularly when saving for a long-term goal such as retirement. Instead, time in the market allows for steady, sustainable growth, a key factor in achieving long-term financial goals.
It’s important to balance your long-term investing strategy in order to weather short-term bouts of market volatility. By maintaining an appropriate mix of a variety of financial vehicles, your asset allocation strategy can help you pursue financial goals within a specific time horizon.
Personal Safety Net
The pandemic left many people who had never been unemployed before with no income. Even those without much in savings may have felt immune from hard times because they had a steady job, employer sponsored health insurance and a retirement plan. Then suddenly, they found themselves with no insurance, no way to pay their bills and worried about withdrawing money from their 401(k).
For those living paycheck-to-paycheck, this underscored the need for an emergency savings fund to cover three to six months’ worth of expenses. Having a separate, liquid savings account can provide a safety net to help people stay in their homes, keep their car and put food on the table during difficult times — without taking on debt or threatening their future financial security.
COVID-19 has impacted not only the U.S. but the entire global population in many ways. Throughout this pandemic, economists have cautioned that economies hit hard by the pandemic cannot fully recover until the coronavirus is contained. The big question on everyone’s minds is exactly when that might happen. Uncertainty and anxiety linger for many Americans, especially among rising case numbers and lack of additional stimulus from Congress.
There is light on the horizon, however. The promise of a new vaccine provides hope that we might begin to return to normal soon. Additional treatments for COVID-19 symptoms also look promising and could provide assistance in lowering death rates while shortening the length and strength of the illness. As we make progress on treatments for our physical health, our economic health should improve as well. Although questions around the coronavirus and its after-effects remain, we feel optimistic that we may be poised to turn the corner and open a new chapter for our economy.
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4 David Goldman and Anneken Tappe. CNN. Nov. 9, 2020. “Dow soars more than 1,000 points after Pfizer announces great news about its vaccine and Joe Biden declared victorious.” https://www.cnn.com/2020/11/09/investing/dow-stock-market-today/index.html. Accessed Nov. 9, 2020.
5 Joseph Woelfel. The Street. Nov. 9, 2020. “Dow Closes Up 800, Nearly 3%, on Coronavirus Vaccine Progress.” https://www.thestreet.com/markets/stock-market-dow-pfizer-vaccinecoronavirus-110920. Accessed Nov. 9, 2020.
6 Richard Beales. Reuters. Nov. 9, 2020. “Breakingviews – Pfizer jolt delivers taste of postCovid markets.” https://www.reuters.com/article/us-health-coronavirus-vaccine-breakingvi/breakingviews-pfizer-jolt-delivers-taste-of-post-covid-markets-idUSKBN27P1YP. Accessed Nov. 9, 2020.
No investment strategy can guarantee a profit or protect against loss in periods of declining values. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by AE Wealth Management. This information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. None of the information contained herein shall constitute an offer to sell or solicit any offer to buy a security or insurance product.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC. The advisory firm providing you this report is an independent financial services firm and is not an affiliate company of AE Wealth Management, LLC. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by AE Wealth Management. This information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. None of the information contained herein shall constitute an offer to sell or solicit any offer to buy a security or insurance product.
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