The outbreak of Coronavirus has sent many people into a panic, wondering if the end is near and their financial well-being will be wiped out. It’s important to remember not to react emotionally, as it could lead to poor choices that will affect your long-term financial future. In reality, the Coronavirus outbreak is expected to taper off in the coming weeks, at which point a financial recovery will begin.
In the meantime, here’s a few tips regarding your financial situation as Coronavirus runs its course. Read along to find out why things aren’t as bad as they seem, and why you should relax amidst all the chaos, while still remaining cautious.
#1) The Bear Market Won’t Stay
For the first time in nearly 10 years, we’re in bear market territory. However, this comes hot on the heels of record North American economic growth, overall. While a financial recession does tend to take place every 8-10 years, the Coronavirus situation is entirely unique. The current economic climate was not caused by a real estate marketing collapse on Wall Street, or funding mismanagement. This is a market driven by uncertainty, at a time when it’s attempting to find the bottom. Proof can be seen in the rapidly fluctuating stock market, which has leaped up and down several times over the course of the last few weeks. Once the bell curve for the Coronavirus infection begins to hit a downward slope, things should go back to normal.
#2) The Recovery Might Take A Whale
The reality is that many jobs will be lost due to the financial strain of Coronavirus, even with government incentives in place. While it’s arguable that these jobs will return once businesses ramp back up, it could take a while. If you’ve found yourself out of a job due to the chaos, now’s the time to fall back on your savings until the market rebounds. Rest assured, supply chains have already begun planning for the next few months, so there’s no reason to panic. Make sure to stay in your employer’s good graces and attempt to negotiate for your job once the market rebounds. This is no time to burn bridges.
#3) It Might Be A Good Time To Invest
While it’s hard to say for certain whether now is the appropriate time to buy stock, it’s certainly worth talking to your financial adviser about. “Buy low, sell high” is the mantra of the investor, and that definitely holds true, here. If you have the extra cash to invest, now’s the time to start planning for it. It will serve as a great benefit to you once the Coronavirus has run its course. It’s important to talk to an expert who may be able to give advice on what sectors to invest in, and how much money to put towards them.
#4) Don’t Sell Just Yet
Fear has caused many to knee-jerk in reaction, and pull out of existing investments. This could be a recipe for trouble down the road. Human beings are never good at making calculated decisions while under extreme duress, and the same holds true here. Remember, you can’t lose money on something you haven’t sold. During the H1N1 outbreak of 2009, the markets reacted negatively as well, but once the number of new cases began to drop, and the number of recoveries accelerated, the market stabilized. Even those 5 years away from retirement should resist the urge to sell off their stock, and instead try to determine if a mixture and savings and investment dividends is enough to weather the storm. If not, you may be solidifying your losses for no good reason.
#5) Gain Some Perspective
A recent RBC Wealth Management report on the Bloomberg Financial Conditions Indexes found that the economic woes generated by Coronavirus aren’t even remotely close to the way the market was struck by the 2008 recession. In fact, the recent spat between Russia and Saudi Arabia regarding market oil saturation has had a far greater overall impact on the economy, all by itself. All this has struck at once, as opposed to the course of a few months, making the entire thing seem a lot worse than it actually is. Once more, this is not an economic situation caused by long-term issues, but of a few singular incidents thrown into the mixture. Rest assured, this is not a permanent or even long-term situation, but Coronavirus fears may rattle many investors up until the end of the year, unless the numbers plunge dramatically and further outbreaks fail to occur.
It’s always best to talk to your financial adviser before making any financial decisions in the heat of a crisis. For that reason, we invite you to contact us today, should you have any questions or concerns. Be sure that fear and panic aren’t the driving force that leads you down a bad financial path. Instead, rely on experts who are here to give you sound, accurate advice.