While our lives are currently fraught with worries and uncertainty, now is the time to make decisions for the long-term. We can easily get wrapped up in day-to-day anxieties brought on by our age of pandemic, but it is important, now more than ever, to focus on what we can control. Beware of knee-jerk, fear-based decisions during this time.
If anything will rock your financial security now and for the future, it’s that!
Instead, focus on the actions and financial principles that will not only preserve financial health in the now but set the stage for future growth and security.
6 Things That Preserve Financial Security in Uncertain Times
Don’t!
Hoard
If you’ve been to a grocery store, you know that there is a perceived shortage of essential items. Toilet paper, paper towels, hand sanitizer, antibacterial soap, eggs, fresh meat, bread and tortillas, even fresh produce, have seemed to have disappeared from stores. We’ve all heard stories of people who have stocked up on thousands of dollars worth of toilet paper, either for a price-gouging resale (which have largely been unsuccessful!) or for their own families.
If you see these items, you will no doubt feel tempted to buy extra. After all, you’ll use it, won’t you?
Here’s our advice: don’t hoard. Buy what you know you will use and no more. A huge contributor to this “shortage” is those who panic-buy much more than they need. Not only does hoarding prevent essential goods from getting into the hands of those who need them, but it eats into your finances.
Pump the brakes. You need to save your money and ensure that essentials — the true essentials — are covered.
Sell Off Investments
What’s the worst thing you can do during any crisis? Panic. For many, seeing stock market volatility or uncertainty within their other types of investments leads to mass sell-offs. We do this because we see a dip and fear that it will only go lower. So people sell in hopes to lose less of their money.
However, you end up losing more this way! Getting out of the market is not a good strategy for your long-term investments and financial well-being. While you may experience short-term losses, the long-term, as it always does, will bring a cycle of recovery and profit. Be patient, not panicked.
Buy Flash-in-the-Pan Stocks
As the stock market has dropped into bear territory, there is a big temptation to seize upon cheaper stock prices or the few industries that have seen stock increase.
Just look at the video-conferencing platform Zoom. Their stocks have more than doubled (and before the pandemic, they were already on the rise). This is all while the S&P 500 has dipped by 25 percent. However, this doesn’t make it a good long-term investment, particularly as the price accelerates.
But wary of buying into trendy stocks and investment opportunities. As normalcy returns, we simply don’t know how the market will react. As with any investment opportunity, make sure the numbers check out and that trends demonstrate long-term returns.
Do!
Cut Your Spending
There are three courses of action we see people taking regarding their spending habits during this time. Some continue to act as normal — spending on all of the things they normally would. Others begin to panic and impulse buy as a means of stress relief, achieving a dopamine hit, or for a semblance of control in these unpredictable times.
Be sure to check out: 6 Small Acts That Can Transform Your Financial Health
The last reaction should be yours: cut your spending. While there are some things we want to keep as normal as possible, your finances should be, apart from your physical hygiene and distance, the first thing that changes. We don’t know how the pandemic will impact our income and finances. Now is the time to be prudent! Cut unnecessary spending and focus on bolstering that “rainy day” fund and contributing to savings.
Know the Facts
In our information age, we have unprecedented access to the facts. Take advantage. Beware of unreliable news sources and instead turn to credible, un-editorialized information. Things to know?
- Your local and state guidelines and orders regarding coronavirus
- National developments and guidelines from the CDC, CARES Act facts, market conditions
- Developing numbers and trends regarding your individual businesses, industries, and markets
Some of these facts may provoke anxiety rather than comfort. That’s okay. The key here is to be informed and informed well so that you can make the best possible decisions for your family as well as your finances.
Consult Professionals
They say that two heads are better than one, but that depends on whose heads are involved! For real estate investors as much as for the Average Joe, seeking out professionals over peers is crucial.
We will want to get opinions from friends and industry experts. Right now, to preserve your financial security, you must talk to professionals with the knowledge of and vested interest in your financial success. They can help you navigate these trying times with greater clarity and less bias. Go to your trusted advisor and discuss your next steps.
Speak to your REI Nation advisor today and make YOUR financial game plan.
