Well, things officially got real. We were all instructed to practice social distancing and isolation for the foreseeable future, which is not something I ever expected to type, say, think, or do. Admittedly, I did not think this would get as serious as it has, but here we are; isolating. It’s very sobering to watch my 14-month-old walk around with not a care in the world, while many are suffering, not only health-wise, but also financially. For some, it will get worse before it gets better – BUT, it WILL get better.
I’m no expert on viruses, nor a novice at that, but I’m cautiously optimistic that we’re taking the necessary steps to bring ourselves closer to peak case amount. I’m a firm believer everyone should be tested as soon as possible, but I understand we do not have that capability yet.
I’ve received a few questions over the past week from friends and clients about what to do, if anything, in regards to their finances. Here are some things to think about.
- It’s different this time. This is very different than the last bear market we encountered in 2008. Prior to the outbreak, the economy was chugging along in a slow growth state and most financial institutions and banks believe that in 3-6 months the situation will resolve itself. By end of year, I believe we will have recouped most of this downturn.
- You need to revisit your financial plan. Any retirement or 1+ year accounts should not be touched. The time to sell, which no one knew to do, would have been a month ago. It’s too late now you’re already in it, so you need to stick it out. Selling only exacerbates the problem and locks in losses. You should never sell after a market downturn because not only do you lock in losses, but you’ll never know when to get back in.
Personally, I’m contributing monthly to my portfolio, which will assist in the recovery when the market decides to rebound.
- Emergency Fund. To further my last point, make sure you have at least 6 months’ worth of expenses in your checking/savings account. A recession may already be here, which is traditionally declared when there is 2 consecutive quarters of negative GDP growth. With a recession comes job loss and less spending, which continues to hurt the economy. It is expected to be a short-lived recession, but having cash on hand will mitigate some of your risk.
- Stay positive. We’ve had pandemics in the past and we’ve overcome them, as will be the case with The Corona. Fear of the unknown is sometimes worse than the actual virus or disease, but taking proper precautions is the best move at the moment. Again, we WILL get through this.
If you have a specific question or you’d like clarity on a particular issue, feel free to reach out. I’d be happy to help.
Fun Fact: In 2008, Harvard Medical School produced a study that showed optimism is beneficial to your overall health by lowering your blood pressure and can even help ward off some diseases.
Disclaimer: This is meant to be general information and is in no way a recommendation for any investment product. All commentary above is purely my opinion.