IRA investors advised to ‘keep calm and wash your hands’
Harry Funk/The Almanac
Sara Botkin advises clients to stay the course with their retirement funds.
Harry Funk/The Almanac
Botkin Family Wealth Management sits on Route 19 in Peters Township.
Editor’s note: This story has been updated to correct the Standard & Poor’s 500 decline Feb. 19 through 28.
The message outside Botkin Family Wealth Management this week is a sign of the times – literally and lamentably.
“Keep calm and wash your hands.”
The Botkins – father, daughter, son – are financial advisers operating along Route 19 in Peters Township. They are well aware of the health and fiscal havoc, and fear, the coronavirus is casting across the globe.
Financial markets have been plunging in recent days, in response to the spreading virus, causing concern among millions of investors for the well-being of their retirement accounts. In an attempt to fortify the economy, the Federal Reserve on Tuesday cut the interest rate by half of a percentage point, a surprise to many in the industry.
Sara Botkin, president of the small firm, wants to ease clients’ angst by convincing them to follow that missive outside her workplace: obey the standard recommendation to wash those hands, and don’t be in a rush to cash in those IRAs and 401(k)s.
The markets are resilient. Stay the course with what are supposed to be long-term investments.
“First of all, our thoughts are with the people being affected,” she said Wednesday morning. “We’re staying in touch with our clients because they need our perspective.”
Botkin said Standard & Poor’s 500 experienced a 12.8% decline between Feb. 19 and last Friday, the sharpest correction ever recorded in a seven-day market period. “That interests people and worries people,” she added. “But this is not something we’ve never seen before.”
Indeed. Over the past 17 years, Botkin said economic markets have absorbed hits from five other global health outbreaks: SARS, bird flu, swine flu, Ebola and Zika. Yet, despite a downturn this week, she said the S&P finished 3½ times higher than where it was when the SARS outbreak began in 2003.
Botkin, who works with her father, Lester, and brother, Lester, said they tell “clients who are in an accumulation phase” (still funding retirement accounts) that they can pick up shares while the market is down “and be wealthier in the long run.”
Gary Boatman has a simple admonition for investors: “The best thing is don’t look at the market.”
Boatman is a financial planner based in Monessen and writes a column for the Observer-Reporter. As of Tuesday morning, he said no clients of Boatman Wealth Management “had sold in the market.”
“I told two or three to sell because they’re retiring this month, but everyone else is in it for the long term. We don’t put money in for just a few years. You can’t panic.”
One of his mantras is that investors balance their finances, that “market money should be in the market and non-market money should not be in the market.”
Boatman said he “is very concerned” that the Fed lowered the interest rates a half-point, but added that there is a lot of uncertainty to this point. “This could go all summer. The Olympics (in Tokyo, July 24 to Aug. 9) could be canceled because of the virus.”
Lester Botkin, Sara’s brother and their firm’s chief investment officer, said he was not surprised that the Fed dropped its rate. “The market was pricing that way the last couple of weeks. The consensus was they were going to do it.”
The financial world is, indeed, in a turbulent state, as is much of the globe over the virus. From a fiscal perspective, though, Sara Botkin stands by that sign outside her building.
“We have faced things like this and markets have continued to march forward. Do not let a short-term downturn derail your long-term financial plans.”