Financial Planning During a Pandemic: Dos and Don’ts

COVID-19 is not the first crisis we have endured, and it will likely not be the last. While we have not experienced the particular pain points of this virus all at one time before—like work from home requirements and grocery store supply shortages—we do have experience over the past several decades with some other pretty nasty events, including: 1970’s energy crisis, 1980’s Black Monday and 1990’s savings and loan crisis, along with the recession during the early part of that decade. Then we feared Y2K, the 2000-2002 Dot-com bubble, September 11, 2001 and the Great Recession of 2008.

We have been through scary times before and have come out stronger on the other side. While past results are not indicative of future performance, we believe this situation is no different. Many things have changed as a result of COVID-19, and even as our country begins to reopen, there are still quite a few unknowns left to navigate. As we all endure the continued effects of this pandemic, we do recommend focusing on what you can control. We have listed a few items to consider:

Dos:

• Do accumulate an emergency fund of cash that equals at least three months of living expenses, if you do not have these funds set aside already. We recommend keeping these emergency funds in an easily accessible, liquid place. While protecting your emergency funds for as long as you can is ideal, keeping a small amount tucked away can help you sleep better at night. Times like these illustrate why cash is king during emotional uncertainty.
• Do continue to save toward your financial goals, like making sure you are deferring into your 401(k). Your dollars will go further in your retirement fund if you continue to contribute as you normally do.
• Do evaluate your risk tolerance and decide whether you are taking the appropriate amount of risk (percentage you invest in stocks vs. percentage you invest in bonds) in your investment accounts.
• Do keep a long-term investment mindset. Leave your money invested, as this strategy will serve you better in the long-run than storing it under your mattress.
• Do make sure you have the appropriate amounts and types of medical, life, disability and long-term care insurance. These policies are a critical foundation of your financial plan.
• Do have a will, power of attorney and advance healthcare directive that reflect your current family and financial situation and that accomplish your goals and wishes.
• Lastly, if you love someone, and we mean anyone (your family, your friends or a partner of any kind) DO make sure you give intentional thought to the things listed above—and DO them!

Don’ts:

• Don’t invest money you will need in the next one to three years in the market. Set it aside in a more liquid account.
• Don’t watch too much of the financial news. Bad news sells, so keep that in mind.
• Don’t look at your account daily. We recommend monitoring periodically—either once a quarter or even once a year.
• Don’t make emotional changes. Pick a strategy and stick to it.
• Don’t stop saving for your goals. When the market goes down, you are buying more shares with your contributions as a result of the drop. This will help once the market recovers.

All of us are spending more time in our homes right now. However, consider stepping away from your news feed for a while (that means your phone and the television). It will reduce your stress to balance the negative input from the media with positive input like family time, time outside in nice weather, a good book or a funny movie.

If you have any questions related to your financial or retirement plan, please contact your advisor or request a member of our team reach out to you. We hope you and your families stay safe and healthy.

Kelly Clary serves as a Member and as a Senior Client Consultant with Waverly Advisors. Click here to learn more about him or to reach out to him directly.

Jack Adams serves as a Member and as a Senior Retirement Plan Consultant with Waverly Advisors. Click here to learn more about him or to reach out to him directly.

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