How to Respond to Falling Coronavirus Stocks
The value of my Vanguard portfolio has fallen by $ 9,371.70 over the past month, with most of those losses occurring in the past week.
I didn’t panic – and if you’re in a similar situation, you probably shouldn’t either.
As Money.com reminds us, if you’re a millennial investor (like me, I’m 38), you’ve just had your worst week in your investment history.
The stock market just posted its biggest weekly drop since 2008. This means that for many millennials who graduated from college around this time, this is the worst week their portfolio has ever experienced.
But none of these losses really count if you didn’t sell your investment as soon as it plummeted. Investing is a long game, and if you’re a millennial, you’re still in the middle of it. Buying and holding is still a great strategy and there are a lot of stocks for sale right now.
But what if you’re not a millennial? What if you are approaching retirement age and are worried that we are in for a recession and that your portfolio may not recover in time to make up for the losses you suffered last week? Well, Money.com still recommends staying stable for as long as possible:
“If you have the proper asset allocation based on your goals and most importantly your timeline, and an adequate bucket of money, then the right action is not to act,” says Timothy Wyman , CFO and managing partner of The Center. … Financial Planner in Southfield, Michigan.
A bucket of money in this case is enough for you to keep the rest of your money in the market until the market starts to recover. An emergency fund can play a role here if you are not currently receiving income from another source (and if you are planning to retire or preparing for FIRE or something else, having at least one year of uninvested cash on hand is means a very smart move, so … um … start working on this in addition to all your other financial goals, I think).
My contingency fund / bucket is currently large enough to cover four months’ expenses, which means that I am currently asking myself if it is wiser to put the money I have set aside for my brokerage account in investments or cash. (I am not asking myself if I should stop making the most of my traditional IRA, SEP IRA, or HSA. These investment vehicles offer some of the biggest tax breaks I can take for myself as a freelancer, so I will continue to invest in them regardless. on what the market is doing.)
I will probably end up investing the money I set aside for my brokerage account; shares are still selling, I have a long enough time horizon to withstand any inconvenience, and I believe in my ability to make more money in the future, even if we end up sliding into another recession.
However, I am not a professional investment advisor and this should not be taken as real investment advice. So, I’ll flip it: what are you doing with your investment portfolios in response to the drop in coronavirus stocks last week? Purchase? Holding? Increasing your money bucket? Did you do exactly what you did two weeks ago?
After all, stocks went up again today – and we’ll see what they do tomorrow.