As the world stock markets took a nosedive yesterday, with investors reportedly nervous over the European debt crisis, financial advisers serving Southwest Minneapolis are advising calm.
"Although we are experiencing uncertainty in the market, it is important that (our clients) keep the long-term perspective in mind," said Thrivent Financial spokesperson Brett Weinberg, speaking of yesterday's 500-point drop in the Dow Jones industrial average, and similar dramatic drops in worldwide markets.
"We are also encouraging them to reach out to their financial representatives if they remained concerned" Weinberg added, "so that they can review their strategy and make sure they are still comfortable with their goals."
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Weinberg said he is not sure how many Southwest Minneapolis investors would be impacted by the market's biggest drop since 2008.
Nonprofits May Be Hit
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Depending on how long the markets stay down, Southwest Minneapolis's nonprofits may start suffering. The stock market, said John Pratt of the Minnesota Council of Nonprofits, is a major source of income for the engines of the nonprofit industry.
"Private foundations are often about two-thirds invested in equities on the stock market," he said, "and their payout is based on the performance of their equities."
While payouts are usually based on three-year averages, Pratt said, when the market goes down and stays down, their payout is reduced, impacting their ability to make grants.
The drop in the American markets could also make individual donors less willing to give.
"The frequency of an individual's contributions (to nonprofits) are based on peoples beliefs about the economy, which are generally correlated to the stock market," Pratt said.
