Here’s How Bad 2016 Has Been for Investors
If the online investing network Openfolio is any indicator, the beginning of 2016 was really tough on portfolios. More than nine in 10 investors on the platform lost money in the stock market in January.
Openfolio, which has 60,000 users with roughly 25,000 connected brokerage accounts, allows users to compare the performance of their personal investment portfolios with others in the network.
The site found that investors who experienced losses saw an average decline of 6.3 percent (the overall market declined about 5 percent). Those who made money in January held an average of 19 percent of their portfolios in cash, compared to just 9 percent of those who lost money.
The start of 2016 represented the one of the worst-ever starts for the stock market, reflecting uncertainty around the Chinese economy and a collapse in oil prices. The Openfolio analysis found that their average investors were overexposed to tech stocks, with the sector accounting for more than 20 percent in aggregate holdings
The wealthiest investors saw the smallest losses (just 2.72 percent), while the bottom quartile of investors lost more than 11 percent in the market last month.
Openfolio found that the youngest investors, those under age 25, had the worst performance for the month, largely because their portfolios are not diversified enough. Those investors have an average of just eight investments, compared to the average of 18 investments in the average portfolio of investors age 65 or older.
Despite the losses, financial pros recommend against making rash moves with your investments. Instead, consider whether you still feel comfortable with the asset allocation strategy you selected during calmer times. If the answer is yes, stick with it. And if the volatility is getting to you, stop checking your statements.