As we are now a few weeks into this tragic period in the U.S. and the world, it can become easier to get discouraged and let negativity take over our mind. One thing we learned during the financial crisis of 2008 was that there are opportunities to make progress during a horrible situation. We must force ourselves to try to identify even the small things we can do to move forward during these tough times. Often, doing small things makes us feel better and more confident, and then progress can begin to snowball into other areas.
With this idea in mind, we crafted this piece for our younger investors and our clients’ children and grandchildren. Many have only been investing and contributing to retirement accounts within the last 11 or so years and have only seen markets continuously rising. This is new territory for them. Here are some small things they can do to potentially make progress during this crisis:
- Reassess your retirement plan allocation. When is the time to go to a more aggressive allocation? Are you sitting on cash that could be gradually invested?
- Down markets like we have recently seen can present buying opportunities especially for younger investors. If you can afford to, think through the timing to frontload or increase your 401k/Roth 401k/Healthcare Savings Account contributions that are usually spread out throughout the year.
- Contribute to a 529 plan for your kids and grandkids, especially if you are funding a plan for someone who has a longer time horizon until they start college. Investing now can pay off as you’re buying equities and investments at lower prices.
- Refinance your mortgage. If you have a 30-year fixed at 4%, now is the time to look into getting one at a 3½ % with low closing costs.
- Confirm you have an emergency cash reserve. Currently, we recommend around 6 months of living expenses. Whatever you don’t need for this emergency cash reserve, again this could be a good investment opportunity with excess cash.
- Don’t panic. History has shown us that investment markets will rebound. Use this time to test your risk tolerance level. Is your portfolio in line with your goals as well as your comfort level with risk?
- Take the time to do a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis on your current job and career path, especially if you are not happy nor experiencing career satisfaction. We believe that we are going to come out of this with a new normal. Unfortunately, there are going to be companies that don’t survive. However, there will be companies who grow and evolve. For example, companies like Zoom and Amazon are probably going to be hiring. Put yourself in the best position to take advantage of this new normal.
- Spend time thinking about your life goals. I like to break my life goals into areas that are important to me: Health, Family, Career, Finances, Community, and Personal Growth. What would you feel great about accomplishing within the next year in each area? What can you do in the next 30 days during possible downtime to make meaningful progress in a critical area?
- Think about your neighbors and extended family. Does anyone need help right now? Do you have a loved one that needs groceries delivered, childcare help, yard work help, etc. We are hearing and seeing great acts of kindness during this time.
- Do something you normally don’t do. Write a hand-written note to a grandparent or someone just to let them know you are thinking of them. Send a thank you note. Pick up the phone and call someone instead of just texting. Read an old-fashioned book.
- If you are experiencing downtime, take an online course to educate yourself on something you have always wanted to learn more about.
- Stay active, get outside, stay socially connected, eat healthy, meditate and keep a positive mindset.
- Finally, take the time to give back. It’s not just money that can help right now. Due to health and safety considerations, many regular volunteers are unable to satisfy their usual commitments. Reach out to local charities and see how you can best support them with your time, keeping safety in mind. For example, currently Meals on Wheels is short on people to deliver much-needed meals.