Staying Level-Headed About Your Investments During the Coronavirus Crisis

Jay Gershman |

Since the coronavirus pandemic has stretched across the country, not only have we witnessed a very serious health scare, but a crash in the market as well, causing quite a financial crisis. If you’re worried about what’s been happening to your investments, you’re not alone. We're going to go over a few tips to stay level-headed about your investments to avoid making decisions based on speculation that can affect your long-term goals. It’s inevitable for panic to be a driving emotion in all of this, but if we follow precautions, we can get through this together. 


Remember the Smart Decisions You’ve Already Made About Your Investments

When the market downturned, there was a lot of unease about the status of investments. People get caught up in the present moment and are apt to make decisions based on emotion that can hurt them in the long run. But it’s important to remember that market volatility isn’t new, there’s always been dips and peaks with the stock market. Remember the work you have done to be responsible with your investments- asset allocation, building your portfolio, and risk tolerance. If you put in the effort to build a strong portfolio, then remember it is designed to manage risk, and protect you from dips in the market. 


You Have a Plan for a Reason

Your financial, investment, or retirement plan is a guide for not only investing your money but managing your assets in a time of economic downturn. A long-range plan should protect you from market fluctuations and short-term volatility, saving you from rash decisions that could result in long-term mistakes. 


Analyze What You’ve Invested In

A common mistake people make with their investments is to sell when the market goes down. But because we are at a time of uncertainty, the best thing to do is to leave everything alone. Think of this as a call to inaction, and remember what you own. If you’ve made high-quality investments, think about whether these organizations will bounce back from this downturn. 

Most people invest in mutual finds or ETFs with various descriptive names. However, most don't know what they're actually invested in. If you had an analysis or X-ray of your portfolio you would find out that it most likely consists of many companies you use on a daily basis, companies you admire and companies you wouldn't sell. Don't focus on what fund you own, focus on what your fund owns. 


Doing Nothing is Doing Something

Leaving your investments alone might be hard to grasp, you might feel that by doing nothing you’ve lost your money. But investments aren't actually lost until they’re sold, which is why selling at a time like this isn’t advised. One thing you can do is rebalance your portfolio. Your asset allocation should’ve been appropriate for your risk tolerance before the coronavirus outbreak, so it wouldn’t make sense to change your investing strategy to something lower-risk right now. Instead, it may be a good time to rebalance your portfolio and get back on track with your target asset allocation. 


Where Are You Taking Your Income? 

Just because the market is down, doesn't mean your life has to change. if you have properly designed your income strategy to take income from interest, dividends, annuities, pensions or distributions from safer assets - your life shouldn't change as your investment portfolio fluctuates. If you find yourself selling assets that have dropped in value in order to pay your bills or live your life plan, then re-evaluate after this correction is behind you. Remember, we're not getting any younger! 


Talk to an Advisor

If you need a second opinion about your investments, or just a different perspective not driven by emotion, talk to your financial advisor to get some professional advice on your investments. They may be able to offer you alternative views and possibilities for future investments. The market might have opened new investment opportunities you couldn’t previously afford, so be open to change and discuss how to move forward.