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Suffering Through Your First Financial Crisis? Read This to Relax Suffering Through Your First Financial Crisis? Read This to Relax
(about 13 hours later)
You already know the rational steps to take during a financial crisis: Don’t look at your 401(k) or investment accounts. Don’t stay glued to CNBC or the financial press. And, above all else, do not panic-sell your investments.You already know the rational steps to take during a financial crisis: Don’t look at your 401(k) or investment accounts. Don’t stay glued to CNBC or the financial press. And, above all else, do not panic-sell your investments.
And yet: As Mike Tyson put it, everyone has a plan until they get punched in the mouth.And yet: As Mike Tyson put it, everyone has a plan until they get punched in the mouth.
A generation of investors is experiencing its first genuine financial crisis. For many millennials — including yours truly — no amount of rational thinking can ease the pain of the first time you watch a fifth of your life savings evaporate in a few weeks.A generation of investors is experiencing its first genuine financial crisis. For many millennials — including yours truly — no amount of rational thinking can ease the pain of the first time you watch a fifth of your life savings evaporate in a few weeks.
To guide us through that pain, I called some seasoned investors who have been around this block before, having seen crises reaching back to Black Monday of 1987. They’re here to offer calm, perspective and a few tips on dealing with the crisis, mentally and emotionally. (Answers have been edited for length and clarity.)To guide us through that pain, I called some seasoned investors who have been around this block before, having seen crises reaching back to Black Monday of 1987. They’re here to offer calm, perspective and a few tips on dealing with the crisis, mentally and emotionally. (Answers have been edited for length and clarity.)
Mel Lindauer, co-author of “The Bogleheads’ Guide to Investing”: “The only two days that really matter in investing are the day you buy and the day you sell. All the ups and downs in between are simply noise. If you can learn to ignore the noise and stick with your investment plan, you’ll do just fine.”Mel Lindauer, co-author of “The Bogleheads’ Guide to Investing”: “The only two days that really matter in investing are the day you buy and the day you sell. All the ups and downs in between are simply noise. If you can learn to ignore the noise and stick with your investment plan, you’ll do just fine.”
Brian Preston, C.P.A., C.F.P., P.F.S., and host of the YouTube channel and podcast “The Money Guy Show”: “Creating wealth is simple — buy the market while you are young, and let compounding growth do its magic. However, wealth creation is not easy. You have to fight all of your human instincts and build a worldview that is separate from the herd. That is hard the first time you experience irrational behavior and whipsaw markets.”Brian Preston, C.P.A., C.F.P., P.F.S., and host of the YouTube channel and podcast “The Money Guy Show”: “Creating wealth is simple — buy the market while you are young, and let compounding growth do its magic. However, wealth creation is not easy. You have to fight all of your human instincts and build a worldview that is separate from the herd. That is hard the first time you experience irrational behavior and whipsaw markets.”
Deena Katz Evensky, professor emeritus in the department of personal financial planning at Texas Tech University: “Panicking will only create more sleepless nights for you. Maintain a ‘buy and hold’ mind-set. The best thing you have going for you right now is time. Don’t try to time the market. You must stay in the market to get market returns. Remember, you are buying companies, not just stock. Businesses are still running and the world is still operating.”Deena Katz Evensky, professor emeritus in the department of personal financial planning at Texas Tech University: “Panicking will only create more sleepless nights for you. Maintain a ‘buy and hold’ mind-set. The best thing you have going for you right now is time. Don’t try to time the market. You must stay in the market to get market returns. Remember, you are buying companies, not just stock. Businesses are still running and the world is still operating.”
Ms. Katz: “Stop listening to or reading financial pornography. If these guys were so smart, they wouldn’t be working for a living. Watching extreme volatility on a daily basis will give you ulcers and sleepless nights. A calmer long-term perspective will take you far. And don’t get angry or beat yourself up with ‘would have, should have’ — but remember that all investments have risk.”Ms. Katz: “Stop listening to or reading financial pornography. If these guys were so smart, they wouldn’t be working for a living. Watching extreme volatility on a daily basis will give you ulcers and sleepless nights. A calmer long-term perspective will take you far. And don’t get angry or beat yourself up with ‘would have, should have’ — but remember that all investments have risk.”
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Mr. Preston: “You can reach a certain point where staying up-to-date on the latest news and information is doing more harm than it is good. You’ve got to separate the actionable information from unactionable information; news about school closings or advice from health officials is good, actionable information. News about market drops or volatility can be valuable information, but not necessarily actionable. Much of the news about the market and coronavirus is great for staying informed and up-to-date, but may not be great for your sanity and financial health.”Mr. Preston: “You can reach a certain point where staying up-to-date on the latest news and information is doing more harm than it is good. You’ve got to separate the actionable information from unactionable information; news about school closings or advice from health officials is good, actionable information. News about market drops or volatility can be valuable information, but not necessarily actionable. Much of the news about the market and coronavirus is great for staying informed and up-to-date, but may not be great for your sanity and financial health.”
Farnoosh Torabi, financial writer and host of the podcast “So Money”: “Unsubscribe from the push notifications. Why do this to yourself? There’s no value in getting daily market updates if your intention is to invest for the very long run. The market will have good days and bad days and terrible days. There’s absolutely no benefit in putting yourself on high alert with every move that it makes.”Farnoosh Torabi, financial writer and host of the podcast “So Money”: “Unsubscribe from the push notifications. Why do this to yourself? There’s no value in getting daily market updates if your intention is to invest for the very long run. The market will have good days and bad days and terrible days. There’s absolutely no benefit in putting yourself on high alert with every move that it makes.”
Alison Green, author of the book and blog “Ask a Manager”: “If you got laid off tomorrow, what things would you wish you had done in the last few months? Those are the things you should be doing now. For most people, that’s saving as much money as you can, shoring up your professional network and getting yourself in shape for a job search. That might mean polishing your résumé, renewing connections with your contacts, even testing the waters with a few recruiters. Short of launching a full-fledged job search, these are the things that will put you in the strongest position if you do get laid off.”Alison Green, author of the book and blog “Ask a Manager”: “If you got laid off tomorrow, what things would you wish you had done in the last few months? Those are the things you should be doing now. For most people, that’s saving as much money as you can, shoring up your professional network and getting yourself in shape for a job search. That might mean polishing your résumé, renewing connections with your contacts, even testing the waters with a few recruiters. Short of launching a full-fledged job search, these are the things that will put you in the strongest position if you do get laid off.”
Ms. Green’s advice for freelancers: “The fear of losing work often drives freelancers to take on more work than they can comfortably handle in case some of it does disappear at some point, which means that freelancers can end up working too many hours and having horrible work/life balance. But if you have real concerns about work drying up during a time like this, it does makes sense to pad your schedule with additional work if you can do it, at least for a while. If nothing else, the extra income will give you a cushion of savings if you do end up in a dry patch later on.”Ms. Green’s advice for freelancers: “The fear of losing work often drives freelancers to take on more work than they can comfortably handle in case some of it does disappear at some point, which means that freelancers can end up working too many hours and having horrible work/life balance. But if you have real concerns about work drying up during a time like this, it does makes sense to pad your schedule with additional work if you can do it, at least for a while. If nothing else, the extra income will give you a cushion of savings if you do end up in a dry patch later on.”
Ms. Green’s advice for college students: “The best advice I can give is to do everything you can while you’re still in school to position yourself for a job search when you’re out. Try to get part-time work in your field or as close to it as you can: do internships, do relevant projects, and make connections in the field you want to work in. Too many people still come out of school without having done those things, and it puts them at a real disadvantage. The more experience and contacts you can build up before you’re officially on the job market, the easier your search will be.”Ms. Green’s advice for college students: “The best advice I can give is to do everything you can while you’re still in school to position yourself for a job search when you’re out. Try to get part-time work in your field or as close to it as you can: do internships, do relevant projects, and make connections in the field you want to work in. Too many people still come out of school without having done those things, and it puts them at a real disadvantage. The more experience and contacts you can build up before you’re officially on the job market, the easier your search will be.”
Ms. Green on whether you should risk taking a new job: “It’s a risk to leave for a new company, but it can also be a risk to stay where you are since your current company could have layoffs too. Learn as much as you can about the stability of both companies. Talk to people in your field and try to get as much insider knowledge as you can. You don’t always need to hunker down and stay where you are during a bad job market; sometimes it does make sense to change companies, whether it’s for more money, a step up, or more stability. You’ve just got to make the decision with as much information as you can.”Ms. Green on whether you should risk taking a new job: “It’s a risk to leave for a new company, but it can also be a risk to stay where you are since your current company could have layoffs too. Learn as much as you can about the stability of both companies. Talk to people in your field and try to get as much insider knowledge as you can. You don’t always need to hunker down and stay where you are during a bad job market; sometimes it does make sense to change companies, whether it’s for more money, a step up, or more stability. You’ve just got to make the decision with as much information as you can.”
Updated May 28, 2020 Updated June 1, 2020
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
More than 40 million people — the equivalent of 1 in 4 U.S. workers — have filed for unemployment benefits since the pandemic took hold. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said.More than 40 million people — the equivalent of 1 in 4 U.S. workers — have filed for unemployment benefits since the pandemic took hold. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said.
There is an uptick in people reporting symptoms of chilblains, which are painful red or purple lesions that typically appear in the winter on fingers or toes. The lesions are emerging as yet another symptom of infection with the new coronavirus. Chilblains are caused by inflammation in small blood vessels in reaction to cold or damp conditions, but they are usually common in the coldest winter months. Federal health officials do not include toe lesions in the list of coronavirus symptoms, but some dermatologists are pushing for a change, saying so-called Covid toe should be sufficient grounds for testing.
Yes, but make sure you keep six feet of distance between you and people who don’t live in your home. Even if you just hang out in a park, rather than go for a jog or a walk, getting some fresh air, and hopefully sunshine, is a good idea.Yes, but make sure you keep six feet of distance between you and people who don’t live in your home. Even if you just hang out in a park, rather than go for a jog or a walk, getting some fresh air, and hopefully sunshine, is a good idea.
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
Charity Navigator, which evaluates charities using a numbers-based system, has a running list of nonprofits working in communities affected by the outbreak. You can give blood through the American Red Cross, and World Central Kitchen has stepped in to distribute meals in major cities.Charity Navigator, which evaluates charities using a numbers-based system, has a running list of nonprofits working in communities affected by the outbreak. You can give blood through the American Red Cross, and World Central Kitchen has stepped in to distribute meals in major cities.
Ms. Torabi: “If we recall, the 20th century had its own host of problems and tragedies. It’s not that I encourage everyone to have all this blind faith in the stock market. Instead, have faith in the human race and its proven ability to adapt, invent, transform and make the world a better place. And that, in the end, is what fuels a strong economy and financial market.”Ms. Torabi: “If we recall, the 20th century had its own host of problems and tragedies. It’s not that I encourage everyone to have all this blind faith in the stock market. Instead, have faith in the human race and its proven ability to adapt, invent, transform and make the world a better place. And that, in the end, is what fuels a strong economy and financial market.”
Mr. Preston: “This downturn does not feel any different to me than any other periods of panic and wild swings. Whenever I hear ‘new paradigm’ or ‘this time it’s different,’ I internally smile and know that we are humming the same song, and that I have been here before.”Mr. Preston: “This downturn does not feel any different to me than any other periods of panic and wild swings. Whenever I hear ‘new paradigm’ or ‘this time it’s different,’ I internally smile and know that we are humming the same song, and that I have been here before.”
Ms. Katz: “Worldwide chaos and terrible news have been around forever, and somehow we live though it. Imagine what your grandparents felt during World War II or what your parents thought when President Kennedy was killed or the Vietnam War raged for years.Ms. Katz: “Worldwide chaos and terrible news have been around forever, and somehow we live though it. Imagine what your grandparents felt during World War II or what your parents thought when President Kennedy was killed or the Vietnam War raged for years.
“There are two ultimate outcomes: We all get through this, or everything falls apart. If everything falls apart, it won’t matter. If we get through this, you have a pretty good chance of seeing things go back to normal, even if it’s new normal.”“There are two ultimate outcomes: We all get through this, or everything falls apart. If everything falls apart, it won’t matter. If we get through this, you have a pretty good chance of seeing things go back to normal, even if it’s new normal.”
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