Practice Portfolio Distancing

March 20, 2020
This is clearly an eerie and unsettling time. We face not just a health crisis, but, as economic activity has slowed, if not stopped altogether, the very real prospect of a recession is here. During times of uncertainty and instability, it’s natural for investors to want to become more active with their funds and seek shelter into “safer” investment vehicles. However, It’s important to remember the goals you set with your advisor when you created your personalized plan.

During this time we encourage you to practice portfolio distancing and focus on your overall financial health. Consider the following:

  • Avoid Crowds. This is both physically and from an investment perspective. These remote work and quarantine situations will inevitably present the opportunity to watch more cable news and spend more time on social media. Instead of crowding around the market’s daily news, gather more towards reviewing your plan and determine how much you can absorb. This is a serious event, but this is a short period of time in the course of a long term plan.
  • Wash Your Hands. Simple, good hygiene habits are proven ways to limit the spread of disease. Investments affect you in the same way. Have you revisited your portfolio’s diversification to see if you have held on to toxic positions that don’t fit your goals? In volatile markets, you may need to rebalance your asset allocation to manage the risks.
  • Understand the Risks. The public perception of risk during a situation such as an infectious disease outbreak is often inaccurate. Some take it extremely seriously while others appear to laissez-faire about it. Use the current volatility as a base point for your risk tolerance moving forward. Many of us started to think additional returns were risk-free, and that we would never be the one to get sick.
  • Educate Yourself. We have been through financial shocks before, albeit, you could argue this is unchartered waters. SARS, Zika, and H1N1 initially raised some of the same concerns as COVID-19. Society has proven to manage health concerns in the past, while the markets have fluctuated the same. Have questions? Meet with an Advisor online!

COVID-19 has caused uncertainty in the market but it is important to remain confident in your planning and investment fundamentals. If you’re unable to work during this time, you may experience stress related to your job status or financial situation. In the midst of market fluctuation, there is only so much you can control so be diligent, remain calm, maintain perspective and recognize your health is the most important factor within your control.

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