15 Sep Legacy Newsletter – Sept. 2020
5 Tips for Navigating the Coronavirus Crash
Dear Friends:
Over the last 6 months, we have seen the stock market hit all-time highs and suddenly crashes.
We’ve seen a worldwide pandemic hit our country and our economy in a huge way. And we have been reminded of topics that we thought were handled and how wrong we were.
We have also been shown the kindness of others, how communities come together to help one another when the world seems unstable. We’ve seen the strength of the human spirit and how we are all interconnected. And we have seen just how resilient we are.
As we continue to navigate the unrest that is COVID-19 and what it might mean for our future, I thought I’d share my 5 Tips for Navigating the Coronavirus Crash.
Now is not the time to panic and change your investment strategy. This is the time to stay level-headed, maintain perspective, and focus on the long-term. We recommend the following five strategies to help you navigate this challenging time:
1. Remember the “pot of gold.”
Downturns are not rare events and statistics favor staying the course. The data shows that in the year following the trough (low point) of a bear market, the returns were on average 47%. This is the “pot of gold” waiting for you at the end of this inverted rainbow.
2. “Unfriend” the financial news.
When the markets are volatile, the news cycles never end. To be clear, you do want to be knowledgeable about what’s happening in your portfolio, but you don’t want to overdo it. You don’t need hour-by-hour updates on your investments any more than you need hour-by-hour updates on your favorite sports team. Watching more closely doesn’t improve the results.
Consider limiting the financial information you receive by social media, TV, and newspapers. Regardless of the medium, they thrive on negativity and these bits of information have a cumulative effect. The more you absorb it, the more you risk anxiety, fear, and even panic. As any good financial advisor will tell you, panic leads to more losses than volatility.
3. Leverage your “financial foursome” in times of stress.
Investing in the stock market involves risk. We all know that going in, but it’s only truly tested when the markets become volatile. It’s normal to feel anxious, concerned, worried, or even fearful. This is precisely why you want to work closely with your “financial foursome,” which includes your CPA, estate attorney, mortgage broker, and financial advisor.
Each of these professionals provides a different perspective, not only for capitalizing on opportunities but also for keeping yourself level-headed.
4. Take your investment strategy from “vapor to paper.”
If you want to stay on track with your investments, regardless of what the markets are doing, you should commit them to writing. An Investment Policy Statement (IPS) is a document drafted between you and your financial advisor that outlines general rules for meeting your investment objectives. It includes criteria for monitoring performance, addressing risk, and communication between you and your advisor.
5. Re-assess your “financial pain tolerance.”
Many factors contribute to individual risk tolerance, including age and short- and long-term financial goals. Volatility can present the perfect opportunity to rebalance. Work together with your advisor to find the ideal balance of investments to suit your comfort level.
What next?
Remember, now is a moment to be cautious, not a moment to panic. Use the time you have to work on your family legacy goals or to review your Estate Plan if it’s been a while. Don’t have an Estate Plan? Now is the perfect time to connect with an Estate Attorney to create one. We’d be happy to help connect you to one (and we would love to be considered as a part of that plan!).
As always, if we can answer any questions or help in any way, please let us know.
Thank you for your continued support of our Northshore Legacy Foundation and help over the years.
To your success,
Brittany Slater-Gautreau
Northshore Legacy Co-Chair