Where do we go from here?
Published: April 9, 2020 | 2:53 PM ET
By: Ivory Johnson, CFP, ChFC, Founder, Delancey Wealth Management, LLC
There’s an old saying that if you want to make God laugh, make plans. Many of us had it all mapped out. We had an idea of when we would retire, what we could expect from our pensions and how much our 401(k)s would be worth when we left the workforce. It wasn’t exact, it never is, but we had a sense of where we stood.
So now what?
Every journey starts somewhere, and the best thing investors can do now in the face of so much uncertainty is to reassess their condition, make fact-based decisions and act accordingly.
1. Acknowledge that there is an emotional component to a market crisis, particularly as you get closer to retirement and especially if this is the third time you suffered huge drawdowns in the last 20 years. On one hand you shouldn’t make a knee jerk response, on the other you should refrain from putting your head in the sand. Meditate if you must but find some peace so you can make good decisions.
2. Review your accounts and see where you stand. Things might not be as bad as you think. Chances are you only gave up the gains from last year, and if it’s worse, you’d rather deal with that reality as soon as you’re mentally and emotionally prepared to do so.
3. Call your advisors to make sure they have a plan if you haven’t already spoken to him/her. Do they know that the economy was already decelerating before the virus, that this is more of a credit crisis than a stock market crash and how they should risk manage the volatility? Make sure they have a repeatable process that can steer you through these difficult times as opposed to a pie chart or a history lesson about the last time the market crashed.
4. Re-run your financial plan to ensure the numbers still work, and if they don’t, get a sense of what actions need to happen to make sure they add up. Some of you may not have a financial plan and that’s alright – you have start somewhere. More than anything you’ll need a viable roadmap that outlines how you intend to move forward.
5. Review your priorities if the plan impacts the goals you set earlier. There’s a chance you may have to retire later or send your child to a less expensive college. You might identify the things that are really important to you during these few weeks and choose to do more with less, that barbeques with the family make you happier than fine dining. Whatever those changes may be, now that we have some time to ourselves is a perfect opportunity to consider all of the possibilities.
6. Once you digest what has happened and create a viable plan you can live with, execute it with a professional that you like, can trust and know is competent.
This, more than anything else, is a humanitarian crisis, so let’s keep everything in perspective. At the same time, we can use this moment wisely so we’re in a better place emotionally and financially when we as a country pull ourselves out of this hole we seem to have found ourselves in.
Ivory Johnson, CFP®, ChFC
Delancey Wealth Management, LLC
20 F Street, NW, Ste. 750
Washington, DC 20001
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