This is an unusual time we live in. One year ago, it would have been inconceivable to suggest that Americans would soon be hoarding food, shuttering businesses, and practicing social distancing. Stock markets around the world have taken a hit, and supply chains have been disrupted due to fears of the coronavirus pandemic. This highlights how the economy is held in a fragile balance that is dependent on all our collective habits.
The United States has gone through many challenges, and we will get through this challenge as well. By keeping a positive outlook and focusing on what is controllable, we will get through this together.
If You’ve Lost Income
If your income is directly impacted, there are some proactive steps you can take to reduce the pressure. If paying your bills will be a challenge, consider pre-emptively calling your credit card companies, bank, credit union, lenders and utility suppliers. By explaining that you are experiencing a loss of income you may be able to negotiate a reduced or deferred payment plan. Many companies understand that there is a hardship and are willing to help in this time of need. If you are a business owner, there are additional resources from the Small Business Administration (SBA), which has begun offering disaster relief loans and assistance. Stay informed about programs that are designed to help. A proactive approach will help you get through the hard times.
Managing Your Investments
History has shown that the longer you stay invested in the market the better your investments will be. Whether the market is moving up or down, you should be invested according to your comfort level. Aggressive portfolios tend to decline faster in bear markets and advance faster in bull markets. By investing according to your comfort level, you are more likely to stay invested during bear markets and ride through the difficult times.
It’s human nature to want to protect your investments during periods of decline. Many investors make knee-jerk decisions to sell when the market is in decline, but every previous bear market has turned around, and eventually this market will too.
For investors with a long-term perspective, a declining market can be a buying opportunity. Think of it as buying when everything is on sale. Trying to time the market is pretty much impossible, but investing a fixed dollar amount on a regular basis will ensure that you are purchasing when markets are going down as well as going up. This is known as dollar cost averaging. Employees who contribute to their 401(k)s typically follow this strategy. Dollar cost averaging will ensure that you get a better average cost over time.
Continue Supporting Your Local Community
Many communities are shutting down, but you can still be an active member and make a positive impact. Many small businesses will find it very difficult staying in business if they are forced to close for an extended period. There are still ways to help your local restaurants. Consider ordering a meal through a delivery app. This will not only help the restaurant but the delivery person, who is most likely a self-employed contractor. Purchasing a gift card can be a great way to support a local business. This would provide money for the business today while you or someone you care about can enjoy the gift card in the future. Charities that depend on donations are also hit hard during recessionary times. If you have the means, remember to donate to a charity that supports a worthy cause.
Take Time for Your Physical and Mental Health
Exercise helps reduce stress. Some activities you can still enjoy even when your local gym is closed are taking walks around your neighborhood, going for a bike ride, practicing yoga and doing a home workout. These activities can all be done while respecting a healthy level of social distancing or while being under a stay-at-home order.
Use your down time to bond with your family by playing games and finding new hobbies to enjoy. There may be a great meal you want to cook or an instrument you haven’t played in years. This can be an opportunity to read a few books that you’ve been wanting to read or go outside and tend to your garden. To learn a new hobby or skill, you can find free resources and tutorials on video-streaming sites. Humans are social beings, so call your friends and family to stay connected. While it’s good to be informed with what is occurring in the world, limit the daily news to an hour a day. Too much news is repetitive and is filled with negative events, which can elevate levels of stress and depression.
This will pass and life will eventually return to normal. Businesses will begin to open again, and restrictions will be lifted. In the meantime, make sure to stay positive by reacting calmly to this unusual period. We all depend on one another, and we will get through this together. If properly handled, we will emerge stronger and more prepared. America is strong, and when this passes there will be many years of prosperity in our future.
Matt Stratman is a financial adviser at Western International Securities (opens in new tab) in Southern California. His focus is helping business owners and entrepreneurs who are planning for retirement. With a strong, client-centered approach he creates personalized investment strategies to help them reach their financial goals. Matt is extremely passionate about retirement planning, believing the better prepared a person is, the more fulfilling their retirement will be.
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