It’s been a while since I last posted here. Anything exciting happen since I last posted?
Beginning around mid March, the United States began a shutdown of our economy due to the spread of COVID-19. Businesses began to tell their workers to work from home in the best case, or they no longer had a job in the worst case. Nearly every sector of the economy began to slow down, with exceptions to companies that sold toilet paper, disinfectant, work from home related products, and remote communication technology.
Not surprisingly, the stock market has been a roller coaster over the last 6 weeks. Huge swings up and down almost on a weekly basis. Though the markets seem to have stabilized, the S&P 500 is still down about 15% from the high earlier this year.
With the uncertainty in the job market and the economy, many people are understandably nervous about their investments. I thought I would share my strategy during this pandemic. Before I do so, I’ll put out this disclaimer: I’m not a licensed financial advisor so please do your own homework before investing.
I’ll break down my strategy by investment account:
- 401K: I have made no changes to my investment strategy in my 401K. In fact, I raised my contribution by 1% when my cost of living increase for 2020 started hitting my paycheck in mid April.
- HSA: No changes.
- Taxable Brokerage Account: This account uses after tax money so I don’t have it on auto-pilot like my 401K and HSA. When the market started to take a nose dive, I took the opportunity to average down on a few positions and start a few smaller positions on stocks I had been watching.
For the most part, my investment strategy hasn’t changed much at all! Why? There are a few reasons:
- My time horizon for needing any of this money is more than a decade away. I can wait out a bear market.
- I learned an expensive lesson the last time we had a recession. I’ll have more to say about this in a future post.
- I made learning about the financial markets and personal finance a priority over the last decade. Because of this, I’m more comfortable with my decisions.
Before making any rash changes in your investments accounts, take a deep breath. If you have a partner, talk it over with him/her. Sleep on it. The point is, stop and think if you are making the best decision for your financial future or just reacting to the hysteria around you.