In our last post, we shared five little things worth knowing as we navigate through a coronavirus-inspired bear market. Basically, the future is uncertain … but markets have always prevailed over time. Your best bet is to build and maintain a globally diversified investment portfolio, and sit tight during the downturns. Then again, it’s hard to do nothing during a crisis. Today, we’ll cover five little things you can do, that should serve you well in the long run.
- You can tend to your personal hygiene. Normally, washing your hands doesn’t directly relate to your financial well-being. But the cliché, if you don’t have your health, you don’t have anything, rings especially true in a pandemic. The sooner we get this thing under control by each of us doing our part, the faster markets are likely to recover.
- You can create (or review) your financial plan. Here at The McClelland Financial Group, we build financial plans assuming some bad, or even awful years will happen. We use Monte Carlo analysis to explore each client’s range of possible outcomes, from worst- to best-case. This helps them more realistically determine the level of investment risks and expected rewards they’d like to pursue. If you’ve never engaged in this sort of planning, this might be a great time to do so. If you have, but you’re having your doubts, you could re-run your numbers.
- You can revisit your discretionary spending. While we hope you won’t need to overhaul your lifestyle (and in some cases, there may be some bargains to benefit from), you can make prudent decisions about your spending. Most notably, you may want to postpone making major discretionary purchases if they would require you to sell stock holdings at a loss.
- You can rebalance your investment portfolio. Rebalancing returns your portfolio to its intended asset allocation. For example, if you’ve planned for a portfolio that’s 50% bonds and 50% stocks, you may currently be holding too many bonds and too few stocks. By selling some bonds and using the proceeds to buy some stocks, you’re effectively buying low and selling high. Or, if you have cash to add to your stock portfolio, you’re again buying stocks at bargain prices.
- You can maintain a positive outlook. Suffice it to say, there are elevated levels of negativity out there. The popular press and social media feeds on fear. But what good does it do you? We’re not saying you should be naïve, but if you let your emotions overtake your reasoning, you’re far more likely to hurt than help your financial well-being.
One great way to remain positive is to listen to our “Think Smart” podcasts, including “How Are We Dealing With Concerns Over Coronavirus?” And let us know if we can assist.