The novel coronavirus – which has infected more than 170,000 people worldwide and is responsible for more than 6,500 deaths – is spreading around the globe. Now that it has made its way to the U.S., many people are preparing for a potential disruption to everyday life.
You know the usual: wash your hands frequently, stay away from others who are sick, avoid traveling to infected areas. But how should you handle the financial impact of coronavirus?
Coronavirus and the markets
Chinese factory outputs have fallen dramatically since the outbreak began, and that is taking a toll on markets globally. Stocks fell 11% at the end of February, which was the worst week-long stock performance since the 2008 financial crisis.
How the U.S. markets will react is still to be determined. Historically, the markets have bounced back pretty quickly from past epidemics. It will depend on factors like how hard the virus hits and how long it lasts.
What action should you take?
Right now, treat your investments as business as usual. Knee-jerk reactions do not usually pan out well long-term.
As with any market disturbance, don’t stalk the markets.
Check that your portfolio represents your goals and current life phase.
Try to get your emergency fund to a comfortable level.
And then, hold steady.
While we can’t predict exactly how the markets will respond, we can learn from the past. And the past tells us that when the markets react to epidemics and pandemics, they tend to stabilize a few months later.
This chart from Charles Schwab illustrates how past epidemics have affected global markets:
The Bottom Line
Panic is rarely helpful, and the same goes for dealing with the coronavirus as it spreads. Use common sense with both your health and finances, and that will help you ride this out as well as possible.
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes financial resources and fee-only financial planning should be accessible. For more information on the services offered, contact Katie today.