We’re still in the process of understanding how the coronavirus outbreak will affect global health care and economics for the rest of the year. However, we can see events that we’ve been anticipating for quite some time: children heading off to college, home upgrades, family vacations, elder care for your parents, and, of course, your own retirement.
These life transitions should still be the central focus of your planning, even during a significant bout of market volatility.
1. The big picture is always brighter
Nobody could have predicted that a virus outbreak would disrupt global business right in the middle of a contentious presidential election cycle. But market history did tell us that the record-breaking bull market of 2009-2019 wasn’t going to last forever.
What goes up eventually comes down.
The further you pull back when you’re looking at market returns, the smaller today’s volatility looks, especially in comparison to big life transitions plotted on a 30 or 40-year retirement horizon. Continuing to work towards those events we can see coming is a much more effective strategy than trying to predict the next natural disaster, the next market downturn, or the next president.
2. You have options
While major market volatility is never about just one thing, the coronavirus is making it hard for companies around the world to buy raw materials from China and sell to Chinese customers. Stocks in the energy, travel, technology, and consumer goods sectors have been hit especially hard.
Luckily, your portfolio is not overly invested in any one company or any one sector. Spreading out your assets across a wide variety of investments — including more stable bonds and cash savings — provides some options during volatility. Diversification provides the means to weather unpredictable changes in multiple industries.
What’s going to guide the decisions we make during this market correction, and the next one? How are we going to decide which levers, if any, to pull, and which to leave alone?
3. Stick to your plan
We can’t plan for the next significant market shakeup, but there are tools and resources no matter what is going on outside of your home. That’s why there’s no “one-size-fits-all” answer when folks wonder what they should do during a moment like this.
- The millennial who just started working and investing is at a very different point on his financial journey than the CEO eyeing retirement in the next five years.
- The couple planning to start their own business has different financial needs than the couple with three smart children all angling for Ivy League schools.
- The retiree planning to golf her way across the country probably doesn’t have the same concerns as the retiree whose husband is experiencing ongoing health problems.
These scenarios all require their own unique, personalized plans. Some folks will make the most progress towards their financial goals by sticking to their current saving and investing strategies, even as the markets are unsettled.
No matter what, your long-term financial goals should be your guide, not today’s headlines.
If you have concerns and want to discuss your financial situation and best next steps, reach out. We would love to speak with you.