Why It’s Important to Stay Informed During the Coronavirus Pandemic

The world is experiencing extraordinarily bizarre times. COVID-19 looms like a dark cloud over the workforce, the stock market and daily living. Constant news on the pandemic can make optimism somewhat difficult. However, counterintuitively, now is the time for investors to act.

Despite the widespread panic, sticking your head in the sand is not the solution. This can damage both your portfolio and your financial health. At Montgomery Taylor Wealth Management, we’ve seen it do both. Instead, it’s better to take action now to better secure your future. This crisis may signal a good time to redesign your portfolio, adjust your trajectory and maximize your opportunities. If anything, use this time to review your plan with a financial advisor you trust.

Drifting is Not an Investment Strategy

Passiveness may feel like an investing strategy, but it isn’t. Even “passive” mutual funds are managed daily by teams of analysts. Ignoring market volatility provides emotional relief, but your portfolio will continue drifting aimlessly if you don’t have a plan in place. With a properly planned and constructed portfolio, you and your advisor can decide if it’s best for you to act offensively or defensively, both of which can benefit you.

Intentional action – or holding – driven by a financial plan and appropriately designed portfolio beats turning a blind eye to the markets.

 

Montgomery Taylor Wealth Management is here for you during this Coronavirus pandemic. Contact us to discuss your financial concerns. 

 

The Best Portfolios are Consistently Managed

Investing isn’t a “one and done” activity. Even if you owned the perfect portfolio, market movements will naturally change its composition over time. As the markets move and your portfolio ebbs and flows, it’s important to consistently check your overall allocation and make adjustments, if necessary. 

At times when there’s a lot of volatility, like now, it’s important to understand what happening to your portfolio. Despite what you may think, there are actually a lot of opportunities for investors right now. Low prices can be a good thing. 

The various asset classes in the markets don’t move in tandem. Whether you’re invested in domestic large cap stocks, international small cap stocks, global bonds or any other investment category, the market shifts in many different directions. While one class increases in value, the other may lose value, or not move much at all. The very nature of the market is constant change and varying levels of volatility, requiring you to adjust your portfolio back to your predetermined allocation. 

Without a portfolio adjustment, you may be overinvested in a particular asset, and unintentionally taking on more risk. If the asset class loses value, your overall portfolio losses will be disproportionately higher, and those profits would be lost. 

Regular portfolio maintenance helps you remain properly diversified, take profits at the proper time and safeguards you from inadvertent overexposure.

Heavy Storms Reveal What Your Ship is Made Of 

With lockdowns and Shelter in Place orders mandated nationwide, millions of Americans are currently unemployed. Meanwhile, the S&P 500 has clawed its way upward from its March decline, hinting that the market is attempting to recover after tumbling in March. Both Main Street and Wall Street are facing uphill battles, and this crisis can serve as a litmus test for financial planning resiliency.

Furloughs, job losses and shutdowns are forcing many investors to rely on savings, unemployment assistance and government stimulus to keep their lifestyle or livelihood afloat. Though painful, this can be an opportunity to build new and improved financial habits, and has added a new level of urgency for emergency savings and planning. 

On the portfolio management side, investors received an additional crash course on the importance of diversification. 

DIY investing appears easy during bull markets, but at Montgomery Taylor Wealth Management, we know that markets get choppy and unpredictable. We know the questions investors are asking and we know that panic and stress can lead to emotional decision making, which can be dangerous, especially when it comes to your finances. 

If you’re currently balancing your financial planning on your own, stay informed of what opportunities are available, both through the stimulus plan and the environment. If you have questions, ask. 

Rumblings of a Market Recovery

The global toll from the Coronavirus pandemic leads analysts to believe the current situation will worsen before it gets better. However, some estimate that if the lockdowns end soon and the economy opens back up, there could be a surge of activity that will level off thereafter.

Going forward, should the market still possess pandemic-driven volatility, diversified portfolios that include fixed income investments can cushion the blow.

Choosing to completely ignore the markets can disable you from learning about new opportunities in the market and how to position yourself for future gains. 

Find a Happy Medium for Your Investing Amid the Coronavirus Pandemic

Effective investing requires a portfolio mix of return potential and diversification. This especially applies to the current crisis. Putting your head in the sand is ill-advised and can make you vulnerable to unintended consequences. From portfolio drift to missing opportunities, the best course of action now is to ensure that your portfolio still aligns with your financial plan and presents a risk level you’re comfortable with.

Your relationship with a financial advisor can help make this pandemic easier to navigate, while keeping your portfolio in good hands. Failing to take action may only compound the financial consequences of the crisis.

Stay informed. Don’t panic. Remember your long-term goals. The financial advisors at Montgomery Taylor Wealth Management are here for you. Contact us if you’d like to discuss your financial situation.

Montgomery Taylor Realistic Financial Planning