Coronavirus is Here: How to Invest During Hard Times

Coronavirus is Here: How to Invest During Hard Times

March 23, 2020

In mid to late February, coronavirus shook the world and forced equities into a bear market. We have witnessed the fastest pullback in stock market value since the 2008 financial crisis. Like that financial crisis, the coronavirus (COVID-19) outbreak is real news that will have market impact beyond what we can imagine.

RELATED POST: Intro to The Stock Market

So what should you do in the face of this coronavirus uncertainty? Let’s run through an overview of markets and how to handle them in times like this.

First and foremost, markets generally don’t bode well with uncertainty, and given the continuing uncertainty around the effectiveness and timelines of containment efforts, it’s unlikely market anxiety and volatility will go away any time soon, but for LONG TERM investors, there’s no need to panic and sell everything now as long as you are financially stable.

What to expect short-term

The coronavirus outbreak has disrupted global supply chains and hurt the earnings of companies globally.

Companies across the earth are experiencing supply chain disruptions (especially those that rely heavily on Chinese manufacturing) and that will reverberate through the economy and result in a slowdown/decline in global GDP growth.

However, we do not think this is a time to panic as long as you are in a financially stable position. If not, read our previous blog post here about what to do to minimize your personal financial burden and head towards financial independence.

Long - Term perspective

While the impact of the coronavirus is certainly unpredictable, governments and central banks around the world have been doing their part to try and stem the damage.

If you own rock-solid businesses like we are MDAS recommend, we believe you will do just fine over the next 10 years.

Nobody can predict what will happen in the next 1 day, 6 months, etc. but the foundation of our nation stands strong in the wake of the coronavirus as we come together to beat this thing.

Read More: Paying off Debt V.S. Investing: The Tradeoffs

To summarize

With the absolute onslaught of negative headlines peddling panic, it is tough to remain optimistic. But we are on the long road, and this short term negativity should not impact your long term plan:

1. Eliminate debt
2. Have a solid emergency fund
3. Spend less than you make
4. Invest the rest
5. REPEAT STEPS 3-4 until you are rich enough to retire

It’s really important to review your plan and personally progress to put this market drop in context.

This is critical because we have seen the LONGEST market run up in history for the past 10+ years. And on average, the markets see a decline of at least 10% about once a year.

Staying dialed into longer term goals rather than the day-to-day fluctuations isn’t easy, but if you can do it, you will end up rich.

Just imagine what the people of the 1900s went through, and the stock market saw a 32,762% increase from 1918 when the Spanish flu ran rampant on earth up to 2000.

Its our turn to endure and to build wealth in the face of our own challenges.

MDAS

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P.S. New blog posts coming your way every Monday!

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