We all remember that time… the 2008 and 2009 market drop.  What a scary time that was for investors and even advisors, nationwide.  Now a few years later, we are hearing mutual fund investors ask, ”Have I recovered from those drops?”  Well here are some things we are seeing as we review client accounts.

Many investors are near a complete recovery, if the following happened:

• Investors stayed in the market and did not try to “time out”
• Investors maintained their investment allocation in equities at the same level of risk.  For example, a 75% stock investor prior to the drop stayed invested in practically the same equity allocation throughout this time.  Yes, changes could be made, but overall equity allocations remained about the same (No reduction in risk level, such as moving from Moderate to Conservative)
• Investors did not redeem any sizeable amounts from their investments.  It was very important to maintain at least the same amount of shares as prices recovered.  In fact, as dividends and capital gains were paid out, investors who reinvested these amounts actually accumulated additional shares which proved to be very helpful in regaining lost ground as share prices recovered

We have also seen added benefits for investors who continued to invest (buy additional shares) during any significant market drops.  This is typically done best through “periodic investment plans” or automatic bank drafts, which takes advantage of an investment strategy called “dollar-cost-averaging”.

We hope this helps as you consider your situation.  Yes, some of the suggestions that advisors gave to their clients back during that ugly drop are proving true as time goes on, especially if investors stick to their game plan.