If you haven’t heard of the Coronavirus going around called COVID-19 and the down market that is happening, my guess is you’ve been living under a rock. Both the fluctuations in the market and the risk of getting ill—potentially very ill—can stir up a lot of emotions.
So, we wanted to give you a little positivity and issue some reminders during this uncertain time on how to weather coronavirus and the stock market.
It’s time in the market, not timing that matters.
Research shows that the more emotional you are about choosing an investment strategy and the more you jump from one strategy to another, the lower your return is likely to be.
So, in unsteady times like these, consult with your investment professional, make changes that are unemotional, and then sit steady in the boat. Unless you are a skilled day trader, don’t watch the markets daily. Give it time to recover before you make any rash decisions.
Minimize withdrawals from retirement accounts.
Because of the down market, you want to preserve what capital you have. By selling now, you are likely selling low. The goal is to buy low, sell high—not the other way around.
Unless you need the money from your retirement accounts for essentials like housing, prescriptions, etc., you should lower your withdrawals. Start by using other sources of income first like Social Security, revenue from a part-time job, or side hustle. This will give your invested funds a chance to rebound when the market starts to go back up.
Buy low, sell high.
Speaking of buy low, sell high: stocks are on sale. They have been at all-time highs, so if you were buying before the downturn in the market, don’t stop now! If you have extra funds at the end of the month or can up your retirement savings through work even just 2%, now is the time to do so!
Don’t overdo stocking up on supplies.
It’s easy when words like pandemic are being thrown around to think “This could be the end.” This feeling of unease often leads to an urge to stock up on things that you think you may need—but be careful. If you buy 200 medical masks, a lifetime supply of canned beans, and toilet paper, you are likely overdoing it.
Research shows that we are more likely to overspend on small-ticket items, so be rational at the store. Have on hand what you may need if you were ill for two to three weeks. Other than that, limit your unnecessary doomsday spending.
Putting your money into a lifetime supply of canned beans limits what you could be investing in the on-sale stock market.
Travel is on sale.
Because of COVID-19, the tourism industry has taken a hit. A big one. So much so that they are doing what is in their power to encourage people to travel.
Now, I’m not talking about traveling in the next few weeks (in fact, we postponed a trip we had planned for this month to August). Stay home and do what you can to stay healthy, but if you have a trip on your mind, now may be the time to book it.
Dr. Thia has a trip planned for September 2020. She previously looked at flights and last week found that the fare was 60% of what she originally anticipated paying. That, coupled with the airlines waiving any change fees if she booked in March, made it a great time to go ahead and book.
If you love to travel, you can’t stay home forever. But if you are concerned about your health and travel, talk with your medical provider before booking anything.
Book A Coaching Session
If you have individualized questions or concerns related to managing money through this time, book a financial coaching session with either Dr. Thia or Lea. We will work to bring you non-emotional information and perspective to help you weather the storm.