The Coronavirus & investING - should you be doing something?

The markets are crazy right now, swinging wildly in one direction or the other. It's times like these that you may find yourself wondering "Am I OK? Is there something I should be doing?"  The short & sweet answer to that question is maybe. 

In order to determine if you should be making changes depends on what you currently own. It's time to a deep dive on your investments to make sure they are the right ones for you. There are few questions you need to answer to determine this:

1. What are you investing for & how long do you have to get there?
There is a difference in how you should invest for retirement which is decades away vs a goal that you have in the next 2-5 years (i.e. saving for a down payment or a wedding). The S&P 500 historically has returned about 7% annually OVER TIME. As we are currently seeing, the market goes down and can go down sharply. So you need time to ride through these cycles. If you need your money back in less that 5 years, you need to think twice about putting that money into the stock market. I know it's not sexy with interest rates as low as they are, but that money needs to be in somewhere less risky like CD's or a high yield savings account.

2. Are you sleeping well?
Are you checking your 401k everyday seeing how big the drop is? Is it stressing you out? Times like these will help you realize your risk tolerance, how well you handle the swings in the market. If you find yourself freaking out about the market downturn, then maybe it's time to take some risk out of your portfolio. How do you do that? You add more bonds or cash into your investment mix. For example, if you are 100% in target date fund in your 401k plan, then you could switch it to 90% and add in 10% in a stable value fund. At the end of the day, this is your money. You need to do the right thing for you so can put your head on the pillow at night and sleep well.

3. Do you have too much in one spot?
One of the biggest fears women have with the stock market is that they are going to get wiped out. And yes, you can get wiped if you have all your eggs in one basket. Think back to the 2008 Financial Crisis. The people that got wiped out worked for companies like Lehman Brothers and had all their money in company stock. When Lehman went under, they not only lost their income, they also lost their net worth. Take a look at your investments, do you own a lot of a particular stock? This is especially important if you work for a company gives you options or has a stock purchase program. As a rule of thumb, you don't want company stock to be more than 10-20% of your net worth. If yes, then this is a good time to diversify your investments.