With recent economic upheaval resulting from Covid-19 pandemic, many investors are suffering losses, many workers now face unemployment or reduced income, and many Americans have sadly watched their savings accounts and retirement accounts dwindle.
Don’t panic. Make the best of a bad situation.
1. Cut back on spending. Use these cutbacks to establish a small cash reserve. Anything is better than nothing. Your goal should be to have at least three months of living expenses tucked away.
2. Keep in mind the stock market will bounce back and your long-term investments will improve once the crisis is over. Making rash decisions during times of crisis can lead to unintended consequences. Discuss all transactions with a trusted financial advisor and let knowledge and experience guide you rather than anxiety and emotions.
3. Cashing out retirement accounts and 401(k)s result in penalties and additional taxes which will only serve to further deplete your assets.
4. Talk to your financial advisor about your asset allocation strategy. If you are approaching retirement, your risk tolerance may be lower. The older you get, the more conservative your portfolio should be.
During uncertain times, meeting with trusted advisors can help give you peace of mind. Make sure your estate planning documents are up to date. Now is not the time to panic, but the time to plan. Contact Stouffer Legal at 443-470-3599 in the Greater Baltimore area.