Question of the Week
Should I move to more conservative investments?
Happy Five-Minute Friday!
What a crazy past couple of weeks, huh!? The news, social media and people everywhere are talking about the Coronavirus. Face masks sales are up 315%, hand sanitizers 73%, and Oat Milk is up 305% (not sure what that last one is about).
People aren’t just panicking in grocery stores, either. Financial markets have turned volatile, too. Through yesterday, the S&P 500 is up 1.52% over the last five days, down 9.62% over the past month and up 10% on the year. What do you do in such a tumultuous market?
Focus on what you can control
If you’re a client or an avid reader of this blog, you know my response is to ride the wave. At BTF, we focus on what we can control (costs, diversification and how much you invest). We talk about and prepare for moments just like this.
That means that the money we invested for emergencies or for dreams in the next five years is in safe stable investments. It isn’t down at all (unless you’ve spent it).
The money you know you’ll need in five to 10 years may be down a little, but you’re still way ahead of where you started.
Any money you won’t be touching for more than 10 years should be in a low-cost, diversified portfolio. You should continue to add to it regularly, no matter what the markets are doing. It may be down right now, but you’re not going to spend it right now. We’ll worry about it in 20 or 30 years.
Feelings are not facts
Still feeling uneasy? That’s completely okay and normal. It’s a scary time. What if this is THE pandemic or it’s THE crash? It’s understandable to want to feel secure and safe in chaotic times. It’s a good time to recognize those feelings. Ignoring them isn’t going to make them go away. And it’s a test in real time. How well are you tolerating the risk we took? Is it different from when we did your risk tolerance questionnaire?
As my therapist reminds me, feelings are not facts. And I know for some of you, facts may help. So here are a few:
- The last time the market was this low was October of 2019…yep just four months ago.
- The S&P is up 182% over the last 10 years.
- Active investing and market timing fails to beat a standard index fund 70-80% of the time. And even when you do get it right, the likelihood of you getting it right again, is even slimmer.
- Missing just a few of the best days in the market can cost you thousands of dollars.
Feel free to reach out!
Anxious still? Feel free to reach out. I’m here for it. I’ve loved hearing the wide range of emotions — fear, anxiety, excitement, satisfaction, guilt — from many of you. I’m happy to hold space for whatever you’re feeling and help you talk it out.
Additionally, I like to provide a couple of other resources in case you want to hear from people besides me. NY Times Columnist Ron Lieber is one of my favorites and provided some great perspective yet again this week. An oldie but goodie comes from Jason Zweig at the Wall Street Journal. He wrote, How to Control Your Fears in a Fearsome Market, back in 2008 when shit was really hitting the fan. He provides practical steps you can take during times like this to help keep your fear in check.
Quote of the Week
“That distress you feel inside, that pain – it’s there to wake you up. It’s a signal, an alarm. It’s telling you, in no uncertain terms, that it’s time to find out who you really are in relation to money.” – George Kinder
Task of the Week
Give yourself a break this weekend. Turn off the news and take a walk. Hang out with your friends in real time instead of spending hours on Twitter. Or just sit and get in tune with what you’re feeling. Facing your feelings will make it easier to let them go when you’re ready.