Contributed by Gregory Mattacola
Well now. Things have certainly gotten a ‘bit’ different over the last month, haven’t they?
That was a March to remember, or one we’d like to forget rather.
From Covid-19 making its presence felt in the United States to unprecedented business closings, event cancellations and distancing rules to massive volatility in the stock market- — I don’t know that I’ve ever been happier to say goodbye to a month than I am right now.
Do we have any guarantees that April won’t be just as unpredictable? None at all.
I do think, however, that most of us have settled into a resoluteness about what it will take to get past this pandemic and all its’ resulting chaos and are more prepared than we were a month ago when we still may not have completely grasped the severity. That, in and of itself, will lend to a calmer month.
Since there’s very little we can control in all this, other than our own actions and following “the rules” – you know what they are by now – let’s address your finances and the market.
The past month has elicited some serious anxiety amongst investors as they’ve seen some large and fast declines erase their 2019 gains and then some. The last 10 or so days of March have seen portfolios claw back some gains and the market stabilize a bit – helped to be sure by the recent stimulus package (The CARES Act).
The natural human instinct when things become volatile is to want to pull your money out of the market and stop the bleeding. I’ll put it back it in when things are calmer, you might tell yourself. Yet, this equals market timing. And to do that would mean you can foretell the future and know exactly when to get back in – you can’t. No one can.
The practice of market timing is a foolproof way to damage your long-term returns. Most of an investor’s return is made on a very small number of trading days. If you are trying to time the market and miss out on a just a handful of the best trading days, your long-term returns will be significantly diminished.
If you have a well-diversified portfolio, matched to your risk tolerance and personal timeline, weathering the pain and pushing forward is likely what is advisable. Now is the time to talk to your financial advisor to make sure that your portfolio is being rebalanced and adjusted accordingly and that any opportunities resulting from the market decline are being taken advantage of.
It’s also a good time to revisit your budget and make sure that you are trimming any excess fat. It’s times like these when people are being furloughed or laid off that the well-planned emergency fund is crucial.
If you are in the age group where you are required to take mandatory distributions from your qualified retirement accounts, The CARES Act is allowing you to skip your 2020 distribution. If you can do without this money, keeping it in your portfolio can aid its’ recovery. Again, this is something you should speak to your financial advisor about.
These are trying times. We are dealing with a previously unknown virus that is frightening to say the least. We have had our social interactions significantly limited. Many of us are working from home and trying to find the balance between productivity and sanity. Kids are home from school which presents challenges of its own. Add in financial pressures from loss of income, unemployment, etc. and it’s easy to become discouraged.
Fight it.
Emerson said, “what lies behind you and what lies in front of you, pales in comparison to what lies within you.” We have all, as a country and as individuals, faced difficult times before. We have persevered and we will do so again.We have it in us so be kind to yourselves and be kind to others.
Soon enough, this will be in the rearview.
Live well, live with love, until next time.
Original content provided by Gregory Mattacola, Esq., Financial Advisor at Strategic Financial Services. Content is provided for educational purposes only and should not be used as the basis upon which to make investment or financial decisions.
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