Three Investment Lessons in History During a Crisis

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The COVID-19 global pandemic sparked confusion among investors in different platforms – stocks, VULs, money markets, mutual funds, and UITF, among others.  The common questions I receive from my clients are the following:

  1.  Now that economic activity is low, what happens to my investment?
  2. Should I remain invested or do I withdraw investments?
  3. What strategy can I use to take advantage of the market?

These questions are quite tricky because there is no way of telling the future.  But a good tool to use to come up with a decision to stay calm and think long-term is to look at history.  This market situation is not new to any economy.  Here are the three lessons we can glean from previous crises on investment.

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**As a disclaimer, these are just my personal opinion backed with actual historical data that I believe to be reliable.  (See Bloomberg articles)


  1.  Stay Invested

Because there is little economic activity during a crisis, NAVPUs are low, making investment values low.  Paper loss is realized (actual) loss if an investor withdraws investment at a time of low investment values. That is why staying invested or buying shares at this time is more sensible.  Taking out any emotional attachment to our investment, though difficult, could prove to be profit-earning once the market starts to pick up (usually having a more sustained growth).

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