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27 Things to Do Now

Jonathan Clements  |  March 21, 2020

TIMES LIKE THESE test the mettle of investors. Want to pass the test? Here are 27 things to do now:

  1. Keep buying stocks. Remember your regret at failing to load up on bargain-priced shares in early 2009? Don’t make that mistake again.
  2. If you’re panicked and tempted to dump stocks, talk to a friend or, alternatively, hire a financial advisor—one required to act as a fiduciary—to coach you through this decline.
  3. Ponder what makes you happy. There are all kinds of things we suddenly can’t do—travel, eat out, go to concerts, attend sporting events. Which ones do you miss the most? Once life returns to normal, use those insights to guide your future spending.
  4. If you’re still in the workforce, make sure you’re prepared for a period of unemployment. Having a large cash cushion is great. But having easy access to cash—through, say, a home equity line of credit or by pulling contributions from a Roth IRA—can be almost as good.
  5. Rebalance from bonds to stocks. Even if you don’t have new savings to invest, rebalancing allows you to take advantage of the stock market’s plunge.
  6. Avoid behavioral mistakes. Research has found we get perhaps twice as much pain from losses as pleasure from gains. Yes, this market decline has been unnerving. But for goodness sake, don’t sell and lock in your losses.
  7. If you feel the need to speculate on individual stocks or market sectors, keep your bets small. Playing with a few percent of your portfolio is probably okay—as long as you’re comfortable with the possibility that the entire sum will be lost.
  8. Control what you can. The financial markets may be chaotic, but your financial life doesn’t have to be. There’s so much that you can control, including how much you spend and save, what you pay in investment costs, your portfolio’s tax bill, how broadly you diversify, what mix of stocks and more conservative investments you hold, and—maybe most important at this juncture—your own emotional response to the market’s turmoil.
  9. Don’t just continue your regular monthly investments into the stock market. Instead, see if you can find extra money to invest. You’re likely stuck at home, spending far less than usual. Put those savings to good use. Stocks are on sale, so stock up.
  10. Don’t extrapolate recent returns. Just because the market has fallen doesn’t mean it’ll keep falling—or that it’ll come roaring back. Trying to guess the stock market’s short-term direction is a fool’s errand and a waste of mental energy.
  11. Consider a target-date retirement fund. It’ll give you a broadly diversified portfolio in a single mutual fund. That means there’s only one share price to look at—and that price will move sedately compared to less diversified investments. A target-date fund will also do all necessary rebalancing for you. What fund should you buy? Check out the target-date index funds offered by Charles Schwab, Fidelity Investments and Vanguard Group.
  12. Think about what’s happening in the economy. Yes, businesses around the world have come to a standstill and 2020’s corporate earnings will be horrendous. But the economic damage shouldn’t be permanent.
  13. Try to ignore the daily market turmoil and the blathering of Wall Street’s talking heads. If you pay too much attention, there’s a risk you’ll convince yourself that you know something that’s unknowable—and make an investment bet you’ll come to regret.
  14. Reassess your risk tolerance. Do you feel panicked about your stock market losses? This isn’t the time to be selling. But you should create a written record of what sort of portfolio you want to own—and then tell a friend or family member, who will prod you to follow through once markets have recovered.
  15. Take tax losses. If you have underwater investments in your taxable account, sell them, realize the loss for tax purposes and then reinvest the money in other investments, so you maintain your stock exposure.
  16. Refinance your mortgage. Thanks to the sharp drop in interest rates, many folks will find it’s worth refinancing. To calculate the savings, first find out how many years are left on your current mortgage. Next, compare your current monthly payment to the payment on a new mortgage of the same length, but at today’s lower rate. You can learn more here.
  17. Keep your losses in perspective. While your stock portfolio may have been hammered, you likely have plenty of other assets that have lost little or none of their value, including your Social Security benefits, any pension you’re entitled to, your home, your holdings of bonds and cash investments, and your long-run income-earning ability.
  18. Remember that lower stock prices should mean higher future returns. We don’t know when we’ll get that better performance. But for long-term investors, expected returns are now higher.
  19. Convert part of your traditional IRA to a Roth. Yes, that’ll generate a tax bill. But thanks to the market decline, the tax hit will be far smaller.
  20. If you aren’t yet invested in the stock market, you could hardly pick a better time to begin. Don’t have much money to spare? There are ways to get started with just a few dollars.
  21. Clean up your portfolio. Do you have individual stocks and funds that you regret buying, but you’ve been reluctant to sell because of the tax consequences? You might find that the market plunge has turned your gains to losses, giving you the chance to rid yourself of unwanted investments.
  22. Draw up a plan for what you’ll do if the stock market drop gets even worse. At what market level would you next rebalance? Would you increase your stock exposure above your target portfolio percentage? Whatever your plan, write it down and tape it to the refrigerator.
  23. Change your mindset. Focus less on your losses and more on the opportunity. Become the seasoned investor you’ve always wanted to be.
  24. Unless it’s your play money, avoid individual stocks and sector funds. We can be confident the broad stock market will bounce back. But there’s no guarantee narrower investments will return to favor.
  25. Ponder what fun things you might do when the crisis is over. In your daydreams, you can visit all kinds of places—at no expense. Make tentative plans with friends and family. We all need good things to look forward to and, indeed, the anticipation is often the best part.
  26. Be optimistic. On Thursday and yesterday, China announced that it had no new local coronavirus infections. If accurate, that means other countries should reach that point within two or three months, assuming we all take the necessary precautions.
  27. Think about the person you’ll be in 10 years—and what your future self would make of your investment decisions today. Would he or she want you to take advantage of the bear market? I think you know the answer.

Follow Jonathan on Twitter @ClementsMoney and on Facebook. His most recent articles include Fear Not, Bad NewsDon’t Lose It and Four Questions.

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