PROVIDENCE, R.I. (WPRI) — As the world watched the Dow Jones take a tumble Monday, panic set in for many investors who didn’t know how the drop would affect their money.
Financial planners we called Monday say they’ve been fielding calls from clients panicking about their 401Ks and investments – but one analyst says there is no reason for investors to panic.
“There’s good times, there’s bad times, there’s everything in between,” said Donald Sowa with Sowa Financial Group, who also hosts “MoneyTalk” on WPRO-AM630.
Sowa walked Eyewitness News through what this drop – the biggest one in four years – means for Rhode Islanders.
“I don’t know anybody today – on this Monday – who should be selling anything,” Sowa said.
According to Sowa, Monday’s drop was just the market making a correction – a dip that will typically be followed by a peak. He said the value of stocks and 401K investments will likely go back up over the next few months.
“I start getting nervous if we don’t get a market correction,” he said, comparing it to correcting a course on a sailboat.
And he doesn’t expect this big drop to turn into a longer term losing trend, also known as a Bear Market, so he encourages people to take advantage of temporarily low prices.
“So this is that wonderful buy-low opportunity that you’ve been waiting for. And eventually the market will go back up. Now, if you don’t believe it will eventually go back up, then you don’t belong in it in the first place,” Sowa said.
Sowa recommends people who haven’t invested, such as millenials entering the workforce, should dip their toes in the water with a small number of shares in stocks they are familiar with.
“The first thing you should do is make a list of publicly traded companies, the ones who have stocks available, in companies that you know,” he said. Those people who buy low could see their accounts soar if the market goes back up as predicted.
Of course, you should always consult your financial adviser when making investment decisions.