The stock market has been quite volatile these past few weeks as investors are increasingly concerned about the novel coronavirus and its impact on markets. The US stock market has experienced one of the fastest corrections in US history. The end of February saw major market drops, with the Dow logging its worst week since early 2008. Almost $7 trillion in market value was wiped out. This caused much panic, but the market did show signs of recovery the following week.
Trying to predict the final outcome of the market is a fool’s errand. And, it is very important to remember that this issue with coronavirus is temporary. We just don’t know how long it will last or how deeply it will affect us. It is far too early to predict and assess its impact on economic activity and corporate earnings.
What can you put into place in your financial plan to decrease the chance that emotion causes you to panic when markets are volatile?
- Protect income in the short-term. You should not depend on market investments for income in the next few years.
- Measure the risk in your portfolio and assess your appetite for risk. Plan for risk before it happens, not after.
- Understand your plan. If you understand your plan, you are less likely to get big surprises that cause you to panic when the stock market goes down.
The market correction can be scary, especially if you are near or in retirement. However, don’t panic and lead with your emotions when the stock market has significant swings. Emotions often get in the way and might cause people to want to sell-off or pull out of the market entirely.
There will likely be several market downturns over the course of your retirement, so why not plan in advance? We can review your risk tolerance and portfolio and work with you to develop a plan for the coming decades to deal with future volatility.
If you’re looking for a retirement plan that can weather a storm like the coronavirus market drop and future market volatility, give us a call at 865-862-6800 or click here to request a free financial review. We can start learning about you and your retirement planning needs and assess your risk tolerance so we can design a plan that’s customized just for you.
