Five ideas for managing personal wealth during COVID-19
The COVID-19 pandemic is prompting investors to think about the future, and the No. 1 question they’re asking us is: How can I best manage my personal wealth and finances through the pandemic, prepare for future crises, and secure my family’s future?
Let us offer a glimmer of positive news. While every crisis poses unique challenges, market and economic cycles respond and adapt similarly. Which means we as investors can prepare — now — by embracing several key ideas:
- Don’t try to outsmart the market, especially in the short run. The odds of success are long, even for professionals, and the price of getting it wrong can be high.
- Take stock of assets, particularly cash and other liquid assets, and your near-term needs. Use cash reserves to cover short-term expenses. You don’t want to be forced to liquidate portfolio assets at the wrong time. (See above about trying to identify the “right” or “wrong” time.)
- Although uncertainty also brings opportunities, don’t jump on any bandwagons. Often, the price for doing so is unjustified. Keep new investments aligned with your financial plan, and don’t forget the wisdom of diversification to safeguard assets.
- See the glass half-full. While the timing is unsure, the current crisis will resolve — just as previous ones have. You don’t want to let pessimism or panic impact future investing.
- Be patient. The temptation to sell when we hear bad news is great. Instead, look beyond current uncertainty and focus on your long-term goals. Most investment time horizons are measured in decades, not months or even years.
There’s no doubt the COVID-19 pandemic has challenged investors. These five ideas, in combination with a strong overall financial and investing plan, helps you protect your assets and successfully navigate this — as well as any future — crisis.