Ask An Advisor About Investing During the COVID-19 Market Downturn

We asked the advisors at local firm, VLP Financial Advisors on what investment advice that have or strategies they recommend during the recent market downturn.

Buy Low (If you Can) 

Warren Buffett said “Try to be fearful when others are greedy and greedy only when others are fearful”. 

With these words in mind, a downturn can be seen as a “buying opportunity.” Though the market price of a particular investment may fall it is not necessarily reflective of the true value of that investment. There is a difference between the intrinsic value and the market value, in the most recent market downturn markets fluctuated swiftly in response to headlines and the overwhelming uncertainty that surrounded this epidemic, this reduced the price of many investments without the business themselves losing profit. 

Some market sectors have been affected more than others during this downturn and some of them show strong recovery potential while other’s future are more uncertain. Depending on your cash-flow you might be able to invest cash or move from bonds to equities. 

Many of my clients who contribute to their IRA or 401k accounts bi-weekly wonder if they should continue to contribute—my answer is that this is great time to contribute and, if possible, consider increasing your contribution. When market values fall your monthly deposit will buy more shares than when market values are high and when markets recover you will have more shares that can participate in a market recovery. 

Market declines are the perfect opportunity to purchase investments at low prices. It’s impossible to time a purchase at the exact market bottom, but historically market prices have recovered. 

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Registered Representatives offering securities and advisory services through Cetera Advisor Networks LLC, member FINRA/SIPC a Broker/Dealer and Registered Investment Advisor. Cetera is under separate ownership from any other named entity.The opinions contained in this material are those of the author(s), and not a recommendation or solicitation to buy or sell investment products.  This information is from sources believed to be reliable, but Cetera Advisor Networks LLC cannot guarantee or represent that it is accurate or complete. 

Converting from a traditional IRA to a Roth IRA is a taxable event. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal or earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 ½ or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes. 

Market Volatility: Investors should consider their financial ability to continue to purchase through periods of low price levels. A diversified portfolio does not assure a profit or protect against loss in a declining market.

VLP Financial Advisors

(703) 356-4360
8391 Old Courthouse Rd., Suite 203
Vienna, VA 22182

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