A global pandemic, economic uncertainty and civil unrest have caused many of us to question everything — from jobs and travel opportunities to investing and retirement savings. It's no wonder even the most stalwart investor may have a challenging time preventing financial anxiety from setting in.
Here are some steps you can take to help you move forward with confidence.
Avoid overreacting. Panic rarely makes a situation better — especially when it concerns money. Take a deep breath, then seize this opportunity to reevaluate your own circumstances. If your investments are diversified across a wide range of industries and sectors and different asset classes, your portfolio may weather the market’s volatility more readily.*
Add to your emergency fund. Be prepared for continued ups and downs with the economy and job market. If you don't already have an emergency fund of three to six months of living expenses in a cash account, start one. If you have one, consider beefing it up.
Reassess your tolerance for risk. If you haven't evaluated your risk tolerance in more than a year, now would be a good time to do so. How much risk are you comfortable taking with your investments? If you feel you have taken on too much risk (or, in some cases, not enough) for your financial goals, consider rebalancing your portfolio.
Review asset allocation. Dividing your money among the major asset classes of stocks, bonds and cash equivalents helps to balance risk and reward. If you originally selected investments to weight your portfolio in certain percentages — for example, 60% in stocks, 30% in bonds and 10% in cash — the market’s recent volatility may have taken your asset allocation off course. Consider rebalancing as necessary.
Keep on investing. Look at your investment timeline. If you have at least a five-year time horizon or longer until you need to start tapping your funds, you should continue investing. A systematic investing program, also called dollar-cost averaging, is an excellent strategy for staying the course. This practice can help you make market lows work in your favor because you are buying more shares when prices are down.**
We’re Here to Help
Keep in mind that historically, markets recover over time, and that’s why it’s wise to have a long-term financial outlook. For a portfolio review to help ease your anxiety, contact your Seaside Client Advisor at 407.567.2222 or view our private banking solutions.
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* Diversification does not guarantee a profit or protect against loss in a declining market.
** Dollar-cost averaging does not guarantee a profit and cannot protect against a loss in a declining market. You should consider your ability to continue investing through prolonged periods of fluctuating price levels.
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