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Viewpoint: Investing in financial markets through the ups and downs

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Kelly Wellborn
Guest Columnist

By Kelly Wellborn

The resilience of the stock market during the pandemic is one of the more remarkable stories in this most unprecedented of years.

Despite COVID-19, a recession, social unrest and natural disasters, the Dow Jones Industrial average is up significantly since it cratered in March but still down from its pre-crash high. The Standard & Poor’s 500 index has performed even better reaching an all-time high on Sept. 2. The IPO market, meanwhile, is hotter than it has been in 20 years.

A recent study by WSFS Bank suggests investors in the Greater Philadelphia and Delaware region remain confident and even bullish heading into the final months of 2020. The WSFS Wealth Study of 350 consumers found that 67% believe life is riskier than before the pandemic. But the same number said their risk tolerance is the same or greater than it was prior to the onset of COVID-19 and that they are in good enough financial shape to cope with the unexpected.

Participants in the study completed in September were between the ages of 35 and 75 and had investable assets of $250,000 to more than $5 million.

The turbulence means investor sentiment may turn quickly. We’re seeing some of that market volatility now as COVID-19 cases surge around the globe. The approval of a vaccine could fuel more positive momentum in the financial markets.

The WSFS Wealth Survey found that 30% said they plan to increase investing in coming months, while another 45% said they would increase investing while conserving some cash. Among the other highlights:

• 56% of those surveyed said they were bullish on individual stocks, with just 19% saying they were unattractive.
• 64% said mutual funds were attractive.
• Just 31% were positive on bonds.
• Investors were split on real estate as an investment – 33% said real estate was attractive, with 29% steering clear.

So, what to make of this? Whether you are investing for you or for your business, there are several key takeaways from the study.

Be in it for the long haul

The best investment strategy is not necessarily the one with the greatest short-term returns. It’s the one that allows you to meet your long-term goals. These typically run the gamut from saving enough for retirement, purchasing a summer home or leaving a sizeable donation to your favorite charity.

Comfort is key

The optimum investment strategy allows you to sleep at night. Consider your tolerance for risk, where you are in life’s journey and your expected rate of return. Be realistic. Outsized returns usually mean far more risk than a S&P 500 Index Fund.

Expect ups – and downs

Not every year has swings like this one, but market volatility is a fact of life. It’s scary when the market seems to be in a freefall, but historically investing in the financial markets has proven to be the best method of growing your money.

Seek help

When it comes to investing, few can go it alone. A good financial advisor will ask you questions about your goals and your risk tolerance and then, most importantly, listen to your responses and map out an effective long-term strategy. It makes sense to shop around. Compare fees, services provided and historical investment performance. Remember that this is a trusted relationship, and you need to feel confident and comfortable with your advisor.

Kelly Wellborn is the president and managing executive of Cypress Capital Management, a subsidiary of WSFS Financial Corp.

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