Beyond the Market

Gwen Garrison |

The past couple of weeks have been filled with quite a bit of uncertainty from the fluctuations in the stock market to declaring a state of emergency due to the COVID-19 pandemic.  The grocery store shelves, and meat counters are being emptied daily.  It goes without saying everyone is fixated on the markets and COVID-19 and how to protect themselves and their families.  Here's a few things I have offered clients and workshop participants to consider during this time.

  1. Remember that a recession is defined by 2 quarters of negative GDP.  We're still in first quarter of 2020.  Albeit this does not minimize the economic impact that individual households and businesses are experiencing
  2. In 93 years of the stock markets existence, we have only had 7 years with a loss of greater than 12%.  And in contrast, we have had 48 years with gains greater than 12%.  So, remember this is one moment in time.  Stay focused on your long-term strategy.
  3. We typically experience significant life events every 5 or more years.  Whether the life event is good or bad it tends to impact us economically.  For example, the birth of a child, a wedding, or a job layoff.
  4. Increase your emergeny savings to 6 months and if you're in an economically fragile industry, then increase your emergency savings to 12 months.
  5. Pay attention to the industry you are employed in or have a business in.  If you and your spouse/significant other are in the same industry, look for ways to diversify income streams.  If you are a business owner and have 1-2 major customers that primarily fund your business, then look for opportunities to diversify your customer base.
  6. Reduce your studnet loan payments by extending the term of your loans.  If you are already on an Income Base Repayment Plan, then your payment should adjust accordingly should your income decrease.
  7. If your retirement investments are primarily employee stock options, you should start diversifying your income portfolio.  Likewise, if you are a small business owner you should have some investments outside of your business assets.
  8. If you are retiring within the next 5-7 years, you may want to remove some unnecessary risk from your portfolio by repositioning some of your investable assets into investments that will provide guaranteed income/living benefits in retirement.

This is not an exhaustive list of things we should consider but these are things that we commonly overlook when we're in crisis mode.  Again, this one moment in time and our response during this period can impact our future.  If you're feeling overwhelmed during this time and would like help to sort through the financial "what ifs" that are unique to your household, then Gwen and I are happy to help you.  Give us a call or schedule your free consultation at www.lifeplanfinancialadvisors.com!