What can you do while the market goes downward? What kind of impact with the coronavirus make on your financial plan? Today we’ll lay out three steps you can take in the midst of the volatility.
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Continuing our conversation from last week related to the coronavirus and the impact it is making in the financial world, we’ll talk about three steps you can take as the market goes downward.
What are your next steps? There’s no assurance or guarantee for where we’re headed. It’s important to know that you are comfortable with your portfolio, even when things in the market are going down.
Step one: don’t react emotionally. Having a well-defined process will help you determine how to proceed. Studies have shown that as the market goes up, you’ll put more in, but then panic when the market goes down. We’re all emotional beings, which is why we need a math-based system to help make our financial decisions.
Step two: understand exactly what you own. Do you know what your mutual funds consist of? Are your allocations actually diversified? What is your bond allocation? How much cash do you have available? Understanding what you own may even give you a sense of comfort as things go down because you know if you don’t need to worry as much.
Step three: review your plan. Do you need to rebalance? Is it time to get more aggressive or more conservative? Did you have too much money in the market? Or are you ready to buy low? Truly ask yourself how you are going to react when the market takes a downturn and how that might impact your life.
[0:28] – Continuing the conversation about the coronavirus and economic uncertainty.
[0:57] – What does it mean to be uncomfortable financially right now?
[3:28] – Step 1: Don’t react emotionally.
[6:26] – Step 2: Understand exactly what you own.
[7:26] – Step 3: Review your plan and rebalance.