Amid the growing COVID-19 pandemic and careening markets in everything from stocks and bonds to oil, it can seem impossible to focus on the long view in investing. Impossible, even, to focus on anything but the next hour or next day.
We don't know the future of the markets any more than the full extent of the coronavirus.
In these unprecendented times, however, we have faith that the investing guidance we have always provided will hold its value.
Focus On Your Reasons for Investing
At this point, panicky questions about buying or selling are pretty much moot. At this writing, the U.S. stock market is down about 33% since Jan. 1, 2020, and every prediction about where we go from here is somewhere between a wild guess and informed speculation.
Focus instead on your reasons for investing. Although it may seem like a great idea at the moment, you won't meet your financial goals by burying your money in the backyard.
You invest so you can buy a home, send your children to college, start your own business – and a hundred other reasons.
Your most important goal is likely to be enjoying a secure retirement. You help make that possible by investing regularly. Investing supplements your regular savings and Social Security.
As 2020 is reminding us, all investing carries some degree of risk.
Investments aren't insured, and your earnings aren't guaranteed. From time to time, you will have to stomach the fact that the value of your investments declines, and right now the freefall seems endless.
For free copies of the Texas Investor Guide: Strategies for Investing Wisely and Avoiding Financial Fraud, provide a mailing address to Robert Elder at firstname.lastname@example.org. Please allow three weeks for books to arrive. The Investor Guide is immediately available in PDF format and as an e-book.
The argument for investing is that over extended periods of time – several decades, not one year or 10 years – you have a chance to achieve a rate of return that will provide greater protection against rising costs, and a better chance for a comfortable retirement, than savings accounts or the proverbial mattress.
Learn and Relearn the Basics
The place to start is the 2020 edition of the Texas Investor Guide: Strategies for Investing Wisely and Avoiding Financial Fraud.
The Investor Guide's mission is to assist investors, from beginning to experienced, in understanding the time-tested principles of investing and avoiding fraud. Toward that end, the Investor Guide addresses:
- Investing for growth – although investing always carries risk, it’s hard to achieve your financial goals otherwise;
- The basics of mutual funds, including target date funds, and how to invest in them;
- Diversification: Asset classes such as stocks, bonds, CDs, real estate, and cash, and how they generally differ in risk and performance;
- The balance between risk and return and strategies to minimize – not eliminate – risk;
- Understanding and controlling the cost of investments; and
- Putting together the pieces of a secure retirement, including IRAs, 401(k)s, and strategies for claiming Social Security benefits.
Just As Important: Avoid Fraud
Fraudsters try to capitalize on fear, so the current pandemic means they're in their element.
Learn to recognize fraudulent and inappropriate investments and know the questions to ask and the steps to take to avoid losing your money to fraud.
One irritatingly common investment pitch we see over and over again is tied to stock market volatility, which we have in spades right now. Fraudulent investment offerings ranging from precious metals to real estate to complex stock market strategies are offered as a supposed hedge against stock market crashes or some other economic calamity.
Try not to let your emotions overtake your common sense.
Count on a flood of scurrilous investment offerings that claim to offer guaranteed returns to help you reclaim your financial footing. Some may be tied directly to the coronavirus. Most will probably be garden-variety, supposedly risk-free scams.
Do not let the current stock market crash convince you to abandon mainstream investing for the fantasy land of guaranteed, high-return investment offerings.
Our Top Threats to Investors in 2020 helps you recognize questionable offerings and tells you the steps to take to avoid them.