Coping when markets are spiraling out of control can be an overwhelming exercise. For most young investors who did not go through the turmoil during the Great Depression or the financial crisis of 2008, the current trends in the market are overwhelming.
Financial markets all over the world took a hit from early march when the Coronavirus pandemic started. Many investors rushed to sell their assets, leading to a collapse that had not been experienced in history. To date, markets are still struggling to recover. And with countries yet to find a permanent solution to the virus, it might be a while before a full recovery comes our way.
But this does not mean it’s an end to your finances and investments. Knowing how to cope during such financial markets turmoils will help you stay manage your health and finances with a clear mind. Here are a few ways to cope during this time;
Be Logical With Your Investments
Telling someone not to panic does not actually help. If you had a panic attack, for whatever reason, having someone yell “don’t panic” at you every few minutes did not likely help the situation.
With the current volatility in the financial markets across the globe due to the Coronavirus pandemic, you are allowed to panic. A little. However, do not let your emotions get the better of you when it comes to your investments.
Investing 101; financial advisors will always tell you not to involve your emotions when investing. Never has this been any truer than when the market is experiencing a historic downturn. That means being logical in your investments.
First, talk to an expert before making any changes to your portfolio. Such conversations help you certify your thoughts’ accuracy while giving you time to start acting on them. Remember that this is not the first time financial markets had such obstacles, and they recovered every time.
Consider Your Age
If you decide to change your portfolio, keep your age in mind in any investment you partake for starters, during a downturn, stocks have lower prices. That makes it an ideal time for young investors with a long time to hit retirement to buy stocks. But, if you are retiring in a few years, your stock investments will not have enough time to recover and earn you substantial returns.
Try To Build an Emergency Fund
If you still have a job or any source of income, try to build an emergency by saving as much as you can. If you already have an emergency fund, it can save you from selling your stocks for the money.
Also, a fat emergency fund might allow you to buy any other disposable income; you have to buy stocks at a low price. If you can turn the chaos in the market into an opportunity, you will start feeling some sense of control- in your life and finances.