During the last week there have been daily headlines covering how investment markets experienced considerable turbulence due to Coronavirus. With that in mind, I’d like to share two important things that you need to do now, regardless of whether this market decline proves to be a short-term event, or perhaps something larger.
You need to know what you own, and why you own it
One of the key themes I’ve discussed in my blog is how there are often warning signs on display for an extended period of time before a market downturn (and false positives along the way), though it is never possible to know exactly when a downturn will next occur. That’s why it’s important to be prepared at all times, working to capture the upside and avoid the downside.
Start by gathering all of your account statements to take a full inventory of how your money is invested. Sounds awfully simple, doesn’t it? It is, though you’d be surprised how many people haven’t reviewed their statements in over a year, or don’t have their login credentials on hand.
Here’s a test: If you were asked how much hard-earned money you have invested and your answer was off by more than $50K (without checking your statements), it’s important you do this now. Why?
Even if you left money unattended and it performed well, you could have a large concentration in something you didn’t intend to. It’s also quite common to discover that you’ve got too much cash (that isn’t earmarked for a specific purpose), or an outsized position in employer stock.
Keep calm, and don’t make any rash decisions
Once you’ve had a chance to review your statements, you’ll have a better view of how you may (or may not) have been affected by events during the last week. For those who are conservatively invested (i.e. substantial position in bonds), you may even see that the impact to your portfolio was only a small fraction of the recent stock market decline.
Also, don’t forget that quick, reactive changes aren’t often a good choice. How come? There are two important reasons. The first is that your investment strategy should be designed to achieve your objectives, with a level of risk that you are comfortable with. Second, and equally important, is that any changes should be implemented at an opportune time (which is not necessarily in the middle of a selloff).
That’s why I work to thoughtfully design an investment strategy for each client, and implement it in a manner designed to capitalize on current market conditions.
If you’d like to discuss your investments and the level of risk in your portfolio, I invite you to schedule a 15-minute intro call to see if a second opinion would be helpful.
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This blog was written by Jeremy Bohne, Principal & Founder of Paceline Wealth Management. Paceline is a fee-only investment advisor serving clients in the Boston area, and on a remote basis throughout the country. Paceline specializes in helping tech and biotech executives, physicians, and those seeking financial planning services.