Don't React, Don't Panic
It is beyond imperative to not panic or react when it comes to your investments when there is a real or imagined “crisis” in the economy and the market. The most important thing to focus on during complicated times is to stay calm. If your long-term plan is to accumulate enough money to fund your retirement, then that is your focus. Keep it your focus. Accumulating enough money for retirement isn’t something that you do overnight. It is something that takes years. When you are investing for the long-term you are investing for the long-term which means to not react or panic when the market volatility comes. You never want to make a short-term or quick change in your allocation or long-term plan.
If you are already retired, you still want to stay on your long-term plan. But maybe you need to change your path of withdrawing less than you are making in return annually to ensure you have money to last throughout your retirement. An example is a safe withdrawal rate is usually 3-4%. If you have been pulling out 5% from your investments, maybe now there is even more reason to spend a little less each month in retirement.
You do not want to panic or react to the current economy brought on by COVID-19, for if you do so, there is a chance that you will end up doing irreversible damage to that long-term plan. Making drastic or sudden changes can cause extreme damage. We have a long way to go yet in regards to the pandemic, but progress is being made towards a vaccine and possibly an end to the lock down. So, what do I recommend? Stay put. Meet with your Wealth Advisor. Do not react. Do not panic. Continue with your plan. If you do not have a plan now is the time to get one.
You generally are investing for the long-term. You never want to make decisions based on emotions when it comes to your money. You never want to panic. Panic and fear never serves you. If the goal is to invest for the long-term such as retirement, it is most important to not panic. The goal when investing is to buy low and sell high. If you go and sell based on your emotions, you generally are not investing based on this important philosophy of long-term investing.
So, during these volatile and uncertain times, don’t react. It is like what do they tell you when a bee lands on you? Do not panic. Do not run. Do not live in fear. Calmly move away. Relax. Get a plan. The same is true when it comes to your money. When times are uncertain or scary get your financial plan updated and if you do not have one, get one. When it comes to your allocation it is important to not panic and to stick with your plan.