We are living through a difficult time. None of us has seen anything quite like this: a global health crisis which has quickly created a global economic crisis. It is broad in scope, impacting all of humanity in one way or another.
There are so many unknowns. I won’t waste your time listing them – you know them as well as I do.
Despite all the uncertainty, and all the pessimism, there is reason for optimism. And – most importantly – there is a critical need for each of us to remain calm, at least when it comes to our finances.
We all know the world will solve the health crisis.
We also know the economy will eventually rebound, because it has rebounded from every crisis over the past century and beyond. The Great Depression. Two World Wars. The “Great Recession.” I could go on.
So the only financial question you may be asking is: should I do something in the meantime, before the world returns to “normal”?
Certainly, you should consider cutting back spending if your personal situation has been impacted – loss of a job, reduced income, or the like.
But for virtually everyone, the only action you should take with your investments is sticking to your plan. That’s because history teaches us the stock market will rebound. It has rebounded from every past crisis.
History also teaches us it is impossible to predict when stocks will rebound. Sometimes the recovery is quick. Sometimes it can take a few years. Once (after the Great Depression) it took over 10 years to recover. But unless you remain in the market, the chances are, you will miss the rebound – the rebound which is inevitable.
If you would like more info, please check out this video of our recent webinar.
In February, I wrote that the Chinese word for “crisis” is made up of two characters: danger and opportunity.
In any financial crisis, the danger is that you abandon your plan -- the plan you made with a cool head, that took into account your long-term goals and your financial resources. It is the plan that knew a crisis was coming at some stage and that built in enough cushion to see you through a crisis, even a long and deep one. The danger is that you forget all the hard work you did and let your emotions rule. That you sell low and regret it later, when the market rebounds ... as it always has.
The opportunity is to hug to your plan more tightly than ever, knowing you can ride through this crisis. You have the opportunity to ignore the financial media, to ignore the daily market gyrations and keep your focus on your long-term goals, knowing the market will rebound eventually, and you have enough cash and bonds to wait it out.
Stay healthy and take care.
|A series of videos produced by our associates explaining how the US government's CARES act may affect you.||CARES Act Videos|
|My blog entry providing lessons I learned from four market crashes.||Blog|
|A recording of our recent webinar in which we discuss recent events surrounding COVID-19 and their effect on the markets||Webinar(3/26/2020)|
|A recording of our webinar in which we discuss "Improving Your Finances in Quarantine"||Webinar (5/5/2020)|
|A link you can use to schedule a free consultation with one of our advisors||Consultation|