The coronavirus pandemic is far from over, so knowing how to deal with your investments is important, says top investment advisor Ric Edelman.
“This is ugly right now, and it is going to get much uglier,” he said, referring to the pandemic.
“My biggest concern is that most people have not come to terms with how bad things are going to get and how long this is going to last.”
The pandemic has yet to reach its peak in the U.S. When that will happen is unclear.
Meanwhile, businesses have shut down and jobless claims have also soared. U.S. lawmakers have responded with a $2 trillion stimulus bill to rescue the economy. It passed the Senate Wednesday night, and the House approved it Friday.
If you are young, you have decades to recover, financially speaking.
“If you have a long-term time horizon and you are able to sustain yourself and your family during this period, you just grin and bear it,” Edelman said.
That means you should have an emergency fund already in place, are secure in your job and can pay your bills.
In fact, the downturn could be considered a buying opportunity.
“The stock market is on sale,” he said. “We haven’t seen an opportunity like this since 2008.”
Remember, in the 10 years after the market hit bottom in 2009, the S&P 500 has delivered a 10-year annualized total return of 17.8%.
If you are nearing retirement, start building your cash reserve. That means if you have to sell some assets, do so, Edelman said.
“If you are going to spend the money in six months or two years, it shouldn’t be invested in stocks because anything can happen in two years,” he said.
You may also want to consider delaying your retirement. Instead, keep working for another year or two.
“Wait for this crisis to be over and reevaluate.”