By Matthew Marcoux, CFP® / April 20th, 2020
5 Thoughts during a financial downturn
Almost two months into this extraordinary pandemic, and I am more thankful than ever for an infrastructure that allows us to continue with business as usual here at CandorPath. In these past weeks, we have been reiterating these five points to all of our clients:
1. Create a diversified portfolio. During review meetings with all of our clients, we use a pie chart to look at the mix of investments. More than ever, it’s important to look at the diversity of assets on that chart.
2. Focus on the long term. Even if you are currently losing sleep over the volatility of the market, remember that the stock market historically rewards long term, patient investors. The time to pull your money out of the stock market and move it to cash is after a recovery has taken place.
3. Expect down years. Though the coronavirus is new and scary, the impact it’s having on the market isn’t really extraordinary. Throughout history, we can point to many events that have enormously disrupted the market, and we have recovered from every one.
4. Choose logic over emotion. Few things are more detrimental to the long term success of your financial portfolio than acting impulsively out of emotion. Be sure to set your emotions to the side before making any financial decisions. Remember that it’s time in the market, not market timing, that matters!
5. Re-balance if necessary. Staying the course with your financial plan may require re-balancing of your portfolio, especially in times like these. if your typical plan calls for 60% stock within your portfolio, and the market has it down to 55% stock, it’s time to re-balance.
Remember, you aren’t alone in this phase. Lean into these tips and into the two CFP®’s walking this journey with you.