As we navigate the coronavirus pandemic, a new survey shows our biggest worry is our finances. Local financial professional Brad Zucker from Safe Money Advisors answers your important money questions.
Q: LET’S HELP EASE THE ANXIETY AND ANSWER SOME OF THE MOST COMMON QUESTIONS, STARTING WITH: SHOULD I BE WORRIED ABOUT THE VOLATILITY ON WALL STREET?
- Investing is often controlled by our emotions. It is common to feel nervous, anxious and worried when the stock market drops, causing some investors to sell. While you may have a loss on paper, it isn’t realized until you take action and sell.
- We need to remember the old saying: Buy low and sell high. Now isn’t the time to sell; for younger investors, it may be the time to buy in or at least stay the course.
- Don’t let your emotions drive your investment decisions. Instead, focus on your long-term goals.
- If you don’t have a long-term financial plan, now is the time to meet with a financial professional who can help you set savings goals for retirement and create a plan to reach them.
Q: ARE WE HEADED FOR A RECESSION?
- By definition, a recession is two or more quarters of negative economic activity.
- It is normal for the stock market to experience ups and downs, and some economists are predicting we will enter a recession in the coming months.
- However, history proves the stock market will recover following a recession.
- It took just over five years for the market to make a complete recovery following the Great Recession, which led to the longest-running bull market on record from March 2009 to March 2020.
Q: WHAT SHOULD I DO WITH MY 401(K)?
- One of the best things to do right now is to ignore your balance. Checking your balance daily or weekly during times of market volatility will only add to your worries.
- Instead, take a look at your account and figure out what you own. Your portfolio should be diversified and have the appropriate risk for your age and how close you are to retirement.
- Consider the Rule of 100; Subtract your age from 100 and that is the percentage of your account that should be exposed to riskier investments like stocks. The rest should be in safer investments.
Q: CAN I MAKE ENDS MEET WITHOUT A PAYCHECK?
- If you’re concerned about being laid off in the near future, start saving as much as you can in an emergency fund. This is money set aside to cover 3 - 6 months of expenses if you were to lose your job, miss a paycheck or face an unexpected medical bill.
- Without having this cash on hand, many people turn to credit cards to cover unexpected expenses.
- With average interest rates over 17%, credit card debt is hard to pay off and can prevent you from meeting your long-term financial goals.
Q: WHAT IS THE FEDERAL GOVERNMENT DOING TO HELP DURING THESE UNCERTAIN TIMES?
- New numbers show as many as 10 million workers will see an impact on their paychecks as restaurants and other businesses take a hit from the coronavirus outbreak.
- As a result, the federal government wants to step in to help ease the financial burden and stabilize the economy.
- The Treasury Department has proposed sending checks to Americans starting in early April. The amount proposed is $1,000 per adult and $500 per child, meaning a family of four could get $3,000.
- Congress and the President are working on a number of proposals to help small businesses, airlines and other sectors hit hardest by the coronavirus pandemic.