(Not) Reacting to the Coronavirus Outbreak
It’s been in the news since January and was declared a public health emergency by the World Health Organization on January 20th, but it’s only in the past few days that we’ve experienced shifts in our day to day activities because of the coronavirus (COVID-19) in Canada.
Right now, market volatility is being spurred on by panic. It’s human nature to observe what others are doing and want to take similar action. We’re always afraid of being left behind.
That’s why financial advisors are urging investors to take a step back from feelings of urgency and reflect on their long-term financial health strategies. Instead of looking at market drops through a lens of fear, Savvy investors are already looking at how to use them as growth opportunities within their long-term strategies.
What’s Going on in the Economy?
There’s a lot of speculation about what might happen in the markets as the impacts of COVID-19 continue to play out. Investment advisors are being cautious and communicating with various cross-sector experts to stay mobile as the situation develops.
There’s been a very specific kneejerk reaction in the global economy (and we’re not talking about the sudden popularity of toilet paper) as people scramble to cash out their investments and sell stocks. It’s an unfortunate situation because it may lead to long-term negative impacts on the financial plans of those who have been quick to react.
Where Some See Risk, Others See Opportunities
For those with great cash flow in their personal situation, the current market trends offer ideal opportunities for strategic investments. Although the global trend has been to sell quickly, this has created great prospects for investors with available funds who are able to buy in while the market is low.
It may seem funny, but as we evaluate market opportunities, financial advisors are applying a strategy not dissimilar to the hoarding of supplies like toilet paper and hand sanitizer. We’re looking at strong investments in companies that have solid cash flow and reliable balance sheets. These are the companies that can weather recurring storms like the one we’re facing now.
Re-Evaluate and Stay the Path
This is not the first time global markets have dropped off suddenly, and it won’t be the last. Although the coronavirus has had more swift consequences than similar health emergencies (such as SARS), there is still a strong case to be made for continuing on an investment plan. If anything, your advisor may want to make small adjustments to offer more protection and benefits now and in the future.
The best advice we can send you away with is this: re-evaluate every part of your financial plan, from your strategies to your goals to your advisor. Ask questions, take notes, and stay informed. If your advisor isn’t proactively communicating with you and available to answer your questions, it’s a good time to find someone you can rely on.