So…it’s been a crazy few weeks (understatement of a lifetime)! I almost never do “timely” podcast episodes. I typically record all my episodes a few months or weeks in advance, so it’s hard to do an episode that is about what’s going on in the news and it still be fresh or on trend by the time it’s published. But, since what’s going right now with COVID-19 and the stock market is something I have never seen or experienced before, I knew I needed to have an episode to talk about it.
That’s why I’ve got Janna Herron, Personal Finance Editor for Yahoo Finance, on the show today to discuss what exactly is happening, how we should react and how best to manage our money in these uncertain times.
Here are some of her top tips which I completely agree with.
I know you’ve probably been hearing this a lot, but honestly it’s the best advice you can take. I understand it’s easier said than done. I myself am trying not to panic. A lot has changed in my life and business in just the past few weeks, such as all my future speaking engagements have been canceled, so it’s hard not to panic and think the worst. But just remember, the best thing you can do is stay calm to maintain a clear head. When you let that panic take over, you’ll start to make emotional decisions that may not be the best choices for you in the long-term.
Another piece of advice that’s easier said than done, but I would really implore you not to make a very rookie investing mistake which is selling off all your investments to free up cash because you’re panicked. I’ve even had thoughts of selling some things off, or stopping some of my investments to have more cash on hand. That’s a natural feeling to have! Our instincts are telling us to cash out and run away from danger, but when it comes to long-term investing you cannot do this. This is the time to continue investing or if you can afford to, dump more money into your investments.
Now you may be thinking “What if I need cash though?” If you don’t have a fully funded emergency fund that can float you for 3-6 months if you lose work, then that’s obviously a different story. If you feel like your livelihood is at risk, then it’s important to have cash on hand. And by that, I don’t mean literally get cash out of the bank to put under your mattress (though there’s nothing wrong with having some physical cash at home). I mean that in order to prevent you from going into debt, you need to have cash to pay for things if your income dries up. In this instance, there’s a few things you can do.
If you’re still worried about not having any cash, then either reduce your regular contributions to your investments, pause them (but don’t forget to restart them when you can afford to), or if you’re really desperate, liquid some of your investments (ideally from your TFSA or taxable accounts first, not your RRSP).
And if you need to borrow money, make it your last resort and avoid high-cost debt like credit cards and payday loans. Work with your bank to secure either a close-ended loan with set payments or a line of credit.
“Buy low, sell high!” You know how many times people have been messaging me with this quote? Yes, it’s true, right now is a great time to buy equities on sale, however that doesn’t mean this is the time to become a day trader when you don’t know what you’re doing. Buying s
tocks can be risky, and there are a lot of emotions involved with trading. If you really want to start investing, great, but don’t just start buying individual stocks. Start by making an investment plan which will help guide you on what to do.
One way to get started would be to enroll in my Investing Foundations for Canadians course.
For full episode show notes visit https://jessicamoorhouse.com/232