The world is in the throes of a pandemic. People are getting sick, lives are being lost and the stock market is in a free fall. COVID-19 is affecting every aspect of daily life--and likely will for months to come. It's left a lot of people wondering what to do about their retirement and their 401(k) accounts.
Here's a look at five things you need to know and do about the current situation and how it will affect your retirement:
1. Don't Panic
Here's the good news (if there is any): History has proven that people and the stock market are resilient.
Never in the history of the world have there been more resources, knowledge and coordination available to help fight a novel virus. And, never has the stock market failed to bounce back after plummeting.
So try not to panic. Wash your hands. Practice social isolation. And remember that the stock market will recover over time.
2. Stay Active
It may seem counterintuitive, but what is happening right now with the stock markets may actually be an opportunity. If you're the type of person who tucks a little money into your 401(k) every month, remember that right now you're getting more for your money.
And if you have some money saved, now might be a good time to invest it, because you can leverage the age-old advice to "buy low, sell high." Stock prices are lower today than they were a day, week or month ago, but history tells us they are bound to go back up.
3. Pay Attention to the Past to Get Paid in the Future
The last time the stock market went through a spell like this was in 2008, which was the beginning of the Great Recession.
And it was an opportunity for everyone, if you knew how to handle it.
At the time, Warren Buffett wrote a piece for The New York Times that has since been dusted off by reporters trying to make sense of the current situation. In the commentary piece, he reminded readers of a simple rule that had helped him (and many, many others) become incredibly wealthy: "Be fearful when others are greedy and be greedy when others are fearful."
Fear is incredibly widespread right now, which means it's time to be greedy (if you agree with Mr. Buffett).
4. Look to the Blue Chips
This pandemic is going to hang around for a while, and it's effects will still be here for a while too. But neither is going to have the staying power of America's Blue Chip companies.
As Buffett pointed out back in 2008, big businesses will suffer some short-term losses, but they will likely be delivering record profits five, 10 and 15 years from now.
So if you're planning for a retirement that's five, 10 or 15 years away, right now might be a good time to look to the Blue Chips.
5. Connect with a Financial Advisor
These are not normal times, but that doesn't mean you should go into a shell and eschew the basic principles of planning for retirement. It means you should take steps to protect yourself and your money--today, tomorrow and well into the future.
And that means connecting with a financial advisor. If you're ready to talk about COVID-19 and your retirement, connect with BD Financial Concepts today.
Advisory services offered through J.W. Cole Advisors, Inc. (JWCA) JWCA and BD Financial Concepts, Inc. are unaffiliated entities.
We are a professional financial services firm located in Sanford, Central Florida.