The situation that we now face with the coronavirus outbreak is unprecedented in modern history. The stock market has lost a third of its value in one month and may go lower still before normal trading resumes.
In times like these, the first thing to do is to stay calm and not make any drastic moves like pulling all of your money out of the market. If you’re investing for retirement, you probably have a long time horizon (20 or 30 years), and it’s very likely that the markets will be back where they were or higher by then. In fact, this isn’t even the first time stocks have fallen so much: they fell by more than 50% in 2008-2009 during the Great Recession, but within five years they had returned to their previous highs and continued on up after that. It can be tempting to try to time the stock market, but it’s nearly impossible to do so successfully over the long term.
Keep On Investing
If you’re like me, you have been a little bit nervous about the stock market lately. After all, if you watched the news or read any financial publications over the last few weeks, it is hard not to be concerned about what kind of impact this economic downturn will have on your investments. However, if I may offer some advice: Don’t panic! As a long-term investor in the stock market myself (I bought my first company share when I was 14 years old), I am confident that most stocks are still priced below their intrinsic value and represent excellent opportunities for growth in the future.
Here are some tips on how to stick with investing while keeping yourself calm:
- Do NOT sell any stocks – unless they are debt instruments that require monthly payments against principal such as convertible bonds and zero coupon convertible bonds (these do not qualify.)
The Stock Market Has a History of Recovering From Downturns
You may be worried about investing in the stock market, but should you be? The stock market has a history of recovering from downturns before. The last time the world faced a similar situation was during the Great Depression of 1929-1939, where stocks went down by almost 90% for 3 years straight! However, after those three years were over (without any help from Donald Trump or Barack Obama), by 1942 stocks had recovered and reached their pre-Great Depression levels again.
The same thing happened during other times as well; for example during World War II there was another big correction in the market but it recovered shortly afterward. So even though we’ve experienced extreme volatility over these past few weeks and months (with some days seeing one percent drops), I can assure you that it’s nothing new to us here at Financiero Times HQ – we’ve seen this happen before too many times already so please don’t panic: everything is going to be alright 🙂
Buy-and-hold is a strategy that focuses on long-term investing.
The basic idea of buy-and-hold is that you can’t predict what stocks are going to do over the next few months or years, so you shouldn’t try to time your investments. Instead, you should keep buying solid companies through bad markets and good ones until they’re no longer good companies—at which point you get out of them as quickly as possible.
While this may sound like it makes sense in theory, it’s actually pretty hard to do in practice because there are constant distractions that can derail you from keeping your eye on the prize: constantly checking the news for updates about your favorite company; watching CNBC every day; reading blogs about stock picks and getting sucked into their daily hype cycles; getting distracted by new trading strategies—the list goes on!
University Endowments Are Still Investing in the Stock Market
While the stock market is down, college endowments are still investing in the stock market. For example, Harvard University’s endowment portfolio is up 1.3% for the year and has gained an average of 5.5% per year over the last decade.
In fact, most college endowments and non-profit foundations are still making money in the stock market! Whether you invest through a 401(k), IRA or directly through your brokerage account, there are many ways to invest while stocks are down without having to liquidate your investments altogether.
Long-Term Care Insurance
Long-term care insurance is a type of coverage that pays for medical or other services you may need as a result of an injury or illness that lasts longer than 90 days. Long-term care can include skilled nursing, rehabilitation therapy, personal care and home health aides.
Long-term care insurance costs vary based on factors like the age at which you buy it, your state of residence and the provider you choose. The average monthly premium for long-term care insurance ranges from $200 to $600 per month in states like California and New York but is less expensive in states like Ohio ($140) or Wisconsin ($100). If you’re over 50 years old with Medicare coverage and not eligible for employer-sponsored benefits, then buying long-term care insurance could be a good choice for protecting against potentially large out-of-pocket expenses for this type of service later in life.
DIAs And Immediate Annuities
In the financial world, there are two types of investments: immediate annuities and dividend-paying investment alternatives. Both have their pros and cons, but they can both be useful in your search for a safe place to park your hard-earned money while stocks remain at record lows.
Immediate Annuities – What Are They?
An immediate annuity is a fixed payment that you will receive each month for as long as you live. The amount paid out can vary depending on how much money was used to buy it (the principal), what interest rate is being charged on that principal sum and how long it takes you to receive payments after purchasing the annuity. One other thing worth mentioning about these types of investments is that because they are not tied directly into stocks or bonds, they tend not attract much attention from mainstream investors looking at high risk/reward opportunities these days.
A bond is a financial instrument that represents a promise from an issuer to repay the lender at a specified future date. Bonds are issued by governments and private companies, with their value determined by factors like creditworthiness, interest rates and maturity dates.
Bonds can also be traded on secondary markets, where they are bought and sold as investments. There are different types of bonds: government bonds are backed by the full faith and credit of the issuing government; municipal bonds (often referred to as Munis) are issued by state or local governments; corporate bonds are debt obligations issued by businesses; high-yield or junk bonds (also known as “junk” because some issuers may not pay back all their debts) typically have higher yields than other kinds of investment vehicles but carry greater risk due to the prospect that they won’t be paid back in full; convertible securities give investors the option to convert their holdings into common stock in a company if certain conditions occur—this gives them access to potentially higher returns but also more risk than traditional stocks
Looking for a way to make money while stocks are down? Real estate is a great option. There are many different ways to invest in real estate, and there are many different locations from which you can choose.
If you have some money saved up that you want to put into an investment account, consider using it to buy a property instead of putting it into stocks or bonds. You’ll get a better return on your investment by buying properties that provide rental income each month rather than just holding onto cash for decades with no return at all (or even losing value).
There are two main types of real estates: residential and commercial/industrial. Residential real estate includes single-family houses and apartments; commercial/industrial includes office buildings, warehouses and factories among other things
Infrastructure stocks are good investments because they tie into the U.S. economy, which has been struggling in recent years. Infrastructure spending is good for the economy because it increases employment and wages, and it improves public transportation, roads, bridges and other building projects. Infrastructure spending is also good for the environment; a study by McKinsey & Company found that every $1 invested in infrastructure creates $1.60 worth of benefits to society over time—a ratio that’s far higher than most investments can produce!
It’s important to invest in infrastructure now so we’re prepared for future generations who will be using these structures everyday when they’re older adults themselves or perhaps even grandparents one day!
Take Advantage of Lower Interest Rates, But Be Smart About It
These are the best times to take advantage of lower interests rates and buy a house, or refinance your existing mortgage. You can also invest in bonds and CDs, which will yield higher returns than you would get from savings accounts. If you are not sure which financial instrument is right for you, try talking to an expert who can help evaluate what’s best for your personal situation.
Investing in bonds or CDs may not be as exciting as buying stocks, but it is still possible to earn decent returns here too. As long as you do not overpay on interest rates or fees (which most retail banks will charge), these investments have historically performed well when stocks fall.
There are plenty of things you can do to protect your investments while they are down and make them stronger.
The stock market has a history of recovering from downturns, and you can make your investments stronger by following a buy-and-hold strategy.
A buy-and-hold strategy is just what it sounds like: you invest in the stock market, hold on to those stocks until they increase in value, then sell them at a profit. This can be especially helpful if you have an IRA or other retirement plan that requires you to withdraw money from your account at a specific time—it’s much easier to find money when there’s more of it!
The key to making this work for you is patience. While some investors may choose to sell their stocks when they feel like the price will go up (which might mean leaving hundreds of dollars behind), others will ride out dips in hopes that prices rebound again soon enough .
The value of your investments is extremely important. It’s imperative that you do everything you can to make sure they are protected when the stock market is down. Both for your own money, and for the benefit of future generations. If you have any questions about your investments and how best to protect them, feel free to contact us at our offices. We would love to discuss your specific situation with you and help make sure you’re prepared for any crisis that may come up in the future.