Atlanta Financial Blog
Although COVID-19 related restrictions are beginning to ease, many people continue to help slow the spread by staying home and self-isolating. There are still unknowns related to the pandemic and how it will play out, undoubtedly keeping us all on edge. Over the past few months, we’ve been forced to acknowledge that the unexpected can and does happen and that we need to take the steps necessary to prepare ourselves and our families for those times.
As the world has dealt with the COVID-19 pandemic over the last several months, we’ve seen an unprecedented impact to global stock markets. The decline in US and foreign equities was surprising in both its severity and speed, with the S&P 500 falling more than 30% in just over a month. This sharp drop from recent highs caused some investors to panic and race for the exits, preferring the safety of cash or treasuries to the volatile stock market. While getting out of the market during a “freefall” might seem like the best move, over the long run it can actually do more harm than good.
During times of market turmoil and economic uncertainty, its tempting to focus exclusively on risk – risk to your portfolio, your income and your plans for the future. And making sure your portfolio is aligned with your appetite for risk and with your time horizon for investing is critical. But focusing exclusively on the risk of losing money can lead investors to overlook the opportunities market declines may bring. Baron Rothschild, an 18th-century British nobleman and member of the renowned Rothschild banking family, is famously credited with saying that “the time to buy is when there’s blood in the streets.” He took his own advice and made a fortune in the panic that followed the Battle of Waterloo against Napoleon.
Has it been a while since you reviewed the strategies that you put in place for your wealth plan? Has your financial situation materially changed since then? Have your plans been updated to reflect the realities of the new tax laws? Based on your answers to these questions, you may benefit from stress testing the strategies you currently have in place.
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