There is plenty to worry about these days, even as the country attempts to reopen and return to some kind of normalcy. Has the Coronavirus pandemic been contained? Will there be a resurgence of new cases? Has the stock market hit bottom? No one has the answers yet, and while we wait for direction, it’s important to stay calm and focused on your long-term goals. For many of our clients, that’s their San Antonio retirement.
Non-essential businesses have been required to freeze operations and close their doors, and many are worried they may not be able to survive long enough to eventually reopen. Millions of Americans have been laid-off or furloughed from their jobs and have filed for unemployment benefits. People who have never paid a bill late in their lives are being forced to defer mortgage and car payments, student loans and credit cards.
The way the Coronavirus has impacted the economy is known as an exogenous shock – a jolt to the market that originated outside of the market itself (unlike the housing collapse of 2008). By its very nature, an exogenous shock-type market impact is usually impossible to see coming and difficult to predict how widespread and disruptive it will be, or when it will resolve itself.
Although the natural inclination is to panic in uncertain financial times, giving in to your financial fears could cause you to take risks that may reverberate for you long after things have improved for everyone else.
It’s a scary time in the world, for sure. But if history has taught us anything, it’s that the economy runs on a cycle: Financial uncertainty is temporary, the world will recover and markets will rally. Case in point: We went through the Great Depression of 1939 and the Great Recession of 2008 and came out on the other side.
If you’re having a tough time finding balance in these uncertain times, below are 4 simple ways to weather this particular financial storm.
Don’t Look at Your Balance Every Day
Although it may be tempting to log in and check your account balances frequently, we advise against constantly monitoring your portfolio. For one thing, the ups and downs can be alarming and unnerving. For another, there’s not much you can do but wait. Worst of all, seeing a huge loss can send you into a panic, and that can result in an emotional decision that you may regret later on.
Remember, you are not alone.
Is it a confusing and anxious time? Yes. Will watching your personal financial graph rise and fall help in any way? No.
Instead, talk with your financial advisor, trust your investments and wait out the current volatility.
Remember Your Long-Term Financial Goals
One good thing about knowing this market downturn was caused by the exogenic shock amid this global pandemic is that the cause is identified and obvious, and that the market will begin to correct itself and normalize eventually, once the virus has literally and figuratively run its course.
For the time being, resist the urge to panic sell. If you get spooked by a really bad market day, you can lock in temporary losses by selling off investments when they’re down. In reality, you haven’t actually lost anything until you’ve sold the stocks and bonds in your portfolio; your losses are just on paper. It’s only when you sell your investments at a lower value than you originally paid for them that you will really have lost anything.
In fact, it’s wise to continue funding your retirement accounts if you’re able. And with your long-term savings goals and San Antonio retirement in mind, this might actually be a good time to invest more, if you can comfortably afford to do so.
Unless you are planning to retire in the next few years, there is time for the market, and your portfolio, to recover, recoup losses and possibly even come out ahead. If you were thinking about retiring in the near future, you may want to consider revising your plans depending on how the current situation has impacted you. Discuss your situation with your financial advisor.
Ultimately, just remember: Good decisions are not usually ones that are made based on fear.
Look at History
The economy is built on ebbs and flows, and while there may be periods of volatility or decline, the stock market has a long and strong history of cyclically lessening declines.
While the short-term losses felt during a bear market can be painful, you should take reassurance in knowing that in past bear markets, the stock market has responded by historically posting more positive than negative returns.
Talk with a Financial Advisor
If your anxiety is too great or your losses are larger than you are comfortable with, it may be an indication that your portfolio isn’t diversified enough or in tune with your risk tolerance. You may want to re-evaluate your investments or meet with your financial advisor to discuss recalibrating your allocations.
If you’re not currently working with a financial advisor or would like a second opinion, PAX Financial Group is happy to help. Contact us to schedule a meeting that works for you – this doesn’t have to be done face-to-face and can respect social-distancing preferences.
Having a game plan to stay the course and finding comfort in the road ahead can be just what you need.
This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.