Personally, I can't help but wonder if the reaction to the Coronavirus, at least here in the U.S., is a little extreme... Of course, I want to preserve lives, but at what point do the preventative measures leave a lasting or permanent negative impact?
What about potential job losses? Small business having to close their doors? Mental health issues like depression? Or worse?
I don't know where to draw the line, but it brings to mind the concept of trade-offs, which I've written about before.
But despite all the uncertainty, and the widespread feelings of helplessness, I want to offer a simple plan of action.
If you're still working, consider:
- Increasing your retirement plan contribution amount (buying more while the market's down)
- Increasing your other savings, especially prioritizing short-term cash reserves (to give you more flexibility and choice going forward)
- Perhaps shifting your investment portfolio allocation to more stocks (buying more while they're cheaper)
- Evaluating your spending and dividing your expenses into needs, wants and wishes.
- Then focus on some of the wants and wishes and re-evaluate which can be reduced, deferred, or eliminated, at least for now.
- Talk to your credit card company or other lenders and ask about better terms. They would rather you keep paying them something than have you default on a loan altogether.
- Quit watching the news (and your portfolio). Get on with livin'
- Review and adjust your personal financial plan as necessary. You've got one of those, don't you?
- If you have already met your short-term cash reserves goal (see bullet #2 above), consider investing any extra cash savings over the course of several weeks or months.
- Call me if you have questions or would like to discuss anything.
If you're already retired, consider:
- Increasing your short-term cash reserves (emergency fund) through your cash flow. I'm not recommending that you liquidate part or all of your portfolio.
- A shift of your portfolio to more stocks. This means buying more stocks while they're less expensive. Think of it as buying companies on sale.
- Remember, your portfolio isn't the market. Despite what the Dow Jones or S&P 500 is doing, you're much better diversified and don't own 100% stocks. At least you should be.
- Evaluate your spending and categorize your expenses into needs, wants & wishes. Maybe reduce or eliminate some of your wants & wishes for the time being.
- Be sure to recognize if you've told yourself a want or wish is really need when perhaps it isn't...
- If you have any debt, talk to your lender(s) to see about negotiating better terms. Many seem open to these discussions at this time. Can't hurt to ask, right?
- Pay attention to the things that matter... your family, friends, health, hobbies, etc.
- Not the market, news, your portfolio, etc. (remember, your portfolio is there to help you focus on and pursue the things that matter)
- If you have one or more old 401k plans at a prior employer, make sure to revisit them and make sure you're not exposed to more risk than you're comfortable with. Or than you actually need to take.
- Despite current advice of "social distancing" I instead would encourage "physical distancing" while staying connected socially via technology. This can be a simple phone call or video calls with Facetime, Zoom or other tools. If you have questions about how to setup and use any of these, let me know and I'll be happy to help.
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