The fall has historically represented a highly volatile time for investors, and 2020 appears to be no different — though for vastly different reasons. As the country continues to grapple with the fallout of the COVID-19 pandemic, we are beginning to see signs of the unemployment rate and the economy at large rebounding. However, the FED information recently released shows that we are far from out of the woods economically and that investors looking for long-term retirement investment options might have to proceed with caution heading into Q4.
Unemployment’s Unexpected Bounce Back
Immediately following the Great Recession in 2009, the United States added 20 million jobs between 2009 and 2020 and saw the unemployment rate hit its lowest mark in decades. When the COVID-19 lockdowns began, unemployment skyrocketed to more than 14% in April. With numbers that high and only partial reopening of the economy, the expectation became that the unemployment rate would remain high for the time being as businesses slowly ramped up any activity.
The unemployment rate then dropped down to 8.4% through August, indicating that the economy might rebound more quickly than initially expected. So while Q3 has shown encouraging signs, there are still many unemployed people, and with the unknown nature of the virus’s trajectory moving forward, investors may remain cautious in their next ventures.
The Future Outlook for Interest Rates
With the uncertainty regarding the country’s recovery trajectory, the FED indicated that the plan remains to keep interest rates at or near 0% for at least the next three years. The belief is that rates remaining at these historical lows will help facilitate the economic growth that we need to recover fully. With interest rates this low, borrowers might be in for an economic boon while certain income-oriented investors may see nightmare scenarios.
What Can Investors Do in the Face of Market Volatility?
October has historically been the most volatile month for the stock market and investors. With the uncertainty surrounding the current financial crisis and the uncertain political landscape, investors might want to approach the coming month with caution and a set plan. Decisions makers might find it wise to go into the current market with a firm understanding of their personal situation and set realistic goals and expectations for their present returns. When making equity investments, a robust long-term vision can be beneficial when presented with any ups and downs.
While having the ability to react and respond to any changes is a key part of navigating the current climate, keep in mind that the market has and will continue to experience periods of volatility, meaning you may not want to panic buy or sell and try to overcorrect a perceived mistake. Keeping an eye on your established personal timeline and goals can help you select a set strategy for the current market and make the adjustments necessary to any future changes.
Are you in need of assistance with estate planning during the current economic conditions? Then let Total Resource Financial help you navigate through the uncertainty! Our experienced financial planners can guide you in establishing a comprehensive plan forward and get you on solid footing. Contact our team to schedule an appointment today!