We are halfway through 2020, and it’s safe to say this year hasn’t turned out like anyone expected. The global pandemic has thrown us into situations we’ve never experienced before, and derailed plans we thought were certain.
But it has also taught us a lot about being prepared for anything, and how to adapt quickly when things change.
Here are some of the lessons we can learn from this year about money and financial planning:
A lesson from 2020: Things always change
It’s a well-known idea in the investment world: When the economy is good, people invest like it’ll always be good. And when the economy is bad, people invest like it’ll always be bad.
Of course, things always change. The markets go through upswings and downswings. Always have, always will. That’s why we try to build resilience into our portfolios.
Have a plan in place for your investments in good times and in bad. Because no matter what’s happening now, the tides will change.
The markets are irrational in the short-term
In March, shortly after it became clear that the coronavirus was spreading rapidly in the U.S., the markets tanked. It was the greatest single-day drop since the 80s, and it came after a very long period of economic stability.
Despite the alarming drops that happened in March, the markets rebounded fairly quickly. In May and June, the U.S. regained 7.5 million U.S. jobs. There were markers that had people hoping our economy was recovering.
But now, in late summer, we are again seeing some indicators that economic recovery is a long way off.
Whether the markets are climbing or crashing, don’t put much stock into short-term behavior. It’s fickle. Watch the patterns over time before you make any decisions that could affect your portfolio.
You need an emergency fund
Most people expect their job will still be there for them tomorrow, but as we’ve learned this year, things can change very quickly. If you don’t have an emergency fund in place, don’t expect you’ll have time later to get one together.
Many Americans are lacking sufficient savings, and were hit hard by the economic blow of the coronavirus. Have a plan and funds in place to protect your family if and when the unexpected happens.
If you’re struggling with managing your portfolio or concerned about the economic impact to your investments, I can help. Contact me here to set up a call.