The market just had a rough quarter — but 80% of investors are making one smart move

Luiz Roberto | Pacific Press | Getty Images

For the stock market, the first quarter of 2020 has been one for the record books.

The first quarter ends on March 31, and as of the market's open Tuesday, the numbers aren't great: The Dow was down around 12% in March, and the S&P 500 was down around 11%. Both of the benchmark indexes are on pace for their roughest month since 2008. For the quarter, the Dow is down more than 21%, and the S&P 500 is down almost 19% — setting them up for their roughest quarters since 1987 and 2008, respectively.

The decline is mostly due to the coronavirus outbreak, which has caused massive economic disruptions around the world.

There's a silver lining, though, says Greg McBride, chief financial analyst at Bankrate: Most investors are staying the course through the market downturn. 

Investors are making smart financial moves

Although the past several weeks have tested investors' fortitude, new data from Bankrate indicates that many are holding fast through the volatility. In fact, more people have put money into their portfolios than have taken it out.

In a recent Bankrate survey of nearly 2,500 adults, of whom 1,175 had retirement accounts, two-thirds of those polled said they intentionally did nothing with their portfolio, and 13% said that they invested more money. That means 80% are staying the course, as experts suggest, or even taking advantage of low prices to buy more.

Another 10% said they were unaware of the volatility, which presumably meant they stuck to their normal investing habits.

By and large, this is good news, says McBride, who describes the data as "surprising, but very encouraging." He adds: "I think some of this is recognition among investors who have been fooled before — they bailed out of stocks in 2008 only to see the market recover and go on to set new highs."

These numbers signal that a majority of Americans are listening to financial advisors and other experts, who recommend that you stay the course and keep up with your regular contributions, even when the market fluctuates. Doing so sets you up to build wealth when the situation stabilizes again, as it always has in the past. 

Only 11% of people in the Bankrate survey said that they moved money out of the market, a choice experts say could be "the most expensive mistake of your investing career." Selling, in effect, only serves to lock in your losses.

I think some of this is recognition among investors who have been fooled before — they bailed out of stocks in 2008 only to see the market recover and go on to set new highs.
Greg McBride
Chief financial analyst, Bankrate

For that reason, it may make sense to actually try and invest more during a downturn or bear market, as it may increase your ultimate return. Experts are even anticipating that the economy will experience a sharp recovery later this year, once quarantines and social-distancing protocols are relaxed.

"Don't get discouraged," St. Louis Federal Reserve President James Bullard told CNBC last week. "This is a special quarter, and once the virus goes away and if we play our cards right and keep everything intact, then everyone will go back to work and everything will be fine."

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