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Coronavirus shouldn’t scare you out of retirement investing


How could the deadly coronavirus in China shape your 401(k) in 2020?

Wall Street professionals who manage money have advised clients to stay the course and remain invested in the stock market. One reason why: Financial markets have been relatively immune to the effects of past epidemics. 

Nearly two decades ago, when SARS (the severe acute respiratory syndrome) swept across China, the Standard & Poor’s 500 index dropped 12% from November 2002 until March 2003, according to Independent Advisor Alliance, a Charlotte, North Caro-based investment advisor. The broad index then rebounded, finishing 2003 about 19% higher than where it started.

“Investors need to wholeheartedly ride out these virus issues,” Steve Frazier, president at Rhode Island-based Frazier Investment Management, says of this year’s outbreak. “Don’t view this as a time to jump out of the market. It may have short-term implications, but it shouldn’t have a major effect on the average investors’ 401(k) or portfolio.” 

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Tipped over glass jar full of coins that's labeled 401(k)

In fact, the Standard & Poor’s 500 is still hovering at record highs, up about 3% this year. That comes after the broad index tallied a nearly 29% gain last year, its best annual performance since 2013. 

Helping to stabilize markets are a strong job market in the U.S. and confident consumers, who drive the economy. 

While financial markets remain resilient, risks from the virus have emerged. Apple warned that it won’t meet its revenue targets because the outbreak has disrupted production and curbed demand for iPhones. Further production delays in China could become a cause for concern if more multinational companies begin to cut their profit or revenue outlooks as a result.



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