If you’ve been following the news this year, you’ve seen and heard one word being repeated over and over again: coronavirus.
Just saying it out loud is enough to make you want to grab a mask, wash your hands, and become a hermit. But you know what’s even more dangerous than a virus? Fear. That will creep in, eat away at you, and cause more destruction than the threat of any illness ever could.
So stop reading headline after headline, take a breath, and don’t panic. We’ll walk you through (calmly) what something like this means for you and your money.
How a Global Epidemic Impacts the Economy
If you don’t remember every single detail of your high school economics class, you’re probably wondering how the heck a virus can mess with the stock market and global economy. Hang on and we’ll break it down for you:
Different countries across the globe depend on one another for things like goods and products—such as clothing, car parts and cell phones. Buying items and manufacturing parts from these countries boosts the global economy.
That said, quarantining people to prevent the virus from spreading can slow economic growth. This happens when things like travel bans, trade being cut off, and production plants shutting down get in the way of countries being able to produce products that the rest of the world relies on. This makes the use of goods and services come to a standstill too. All of that rolled together with the fear being fed to us has the potential to cause Wall Street, the stock market—and people—to freak out.
In order to give the economy a jolt, the Federal Reserve even lowered interest rates by half a percentage point.1 Doing this, they hope, will encourage consumers to keep spending and keep the economy healthy. And if you’re in the market for refinancing your home from a 30-year mortgage to a 15-year—that’s very good news for you. You could lock in a crazy low interest rate now, which would save you thousands of dollars in the long run.
The truth is—yes, watching a virus like this spread makes us all super uneasy. And our hearts go out to all those who have been devastated by the coronavirus. But don’t let your concern turn into anxiety and panic. We’ll all get through this.
How to Stay Calm if You’re Investing
It’s natural for your heart to race when you see fearful headlines scroll across your television and newsfeed. You’re only human. Unsettling news about stocks dropping and a virus spreading can really do a number on your portfolio (and your morale). But here’s something the mainstream media isn’t telling you: Don’t freak out.
Did you get that? It’s important—so important that we’re going to say it again.
Don’t freak out.
Here’s what you need to do to keep your peace of mind through it all:
Remember your goal.
What was the idea behind your investing in the first place? You were probably thinking of the future and how investing now and leaving it alone for many, many years would eventually bring you a hefty return on your investment. And that logic still applies!
If you have investments right now, it’s natural to feel shaky. But don’t make any knee-jerk reactions based on what you see on the news. Remember that when investing, you’re in it for the long haul. So keep your sights there. Don’t get so tripped up by the bumps in the road that you lose focus of the truth: Investing is for the long term, not the short term.
Talk to your financial advisor.
If you still feel unsure, get on the phone and call up your investment pro. Sometimes, just talking things out with the person you’ve trusted with your investments can really help to calm your nerves.
What Does This Mean for Your Money?
If you’re investing, take a big breath, calm down, and remember that a rocky day, week or month won’t impact your investments 20 years from now.
Market chaos, inflation, your future—work with a pro to navigate this stuff.
Will the market take a hit? It sure could. But guess what? It will bounce back. It always does. And when it recovers, you stand to make a nice return. But if you pull out when things look bad, it’s a dumb move because you’re out of the game completely. You can’t time the market. Jumping off the roller coaster while it’s going is never a good idea (those are the only people who get hurt, actually). Don’t let your emotions take control of your money. Now is not the time to pull your investments, go into doomsday mode, or cash in your 401(k) for gold coins. Ride the wave here—ride it down and ride it back up again.
And if you aren’t in the place where you can invest yet, our advice to you is simple: Stay the course. Get your own household in order by making sure you have an emergency fund in place. It puts a buffer between you and life and gives you peace of mind despite the chaos going on around you.
If you’re not already working the 7 Baby Steps, it’s time to start paying off debt, sticking to a budget, and cutting back on expenses. Bottom line? Keep moving forward and stay on your path no matter the ups and downs the stock market takes.
Maybe you aren’t investing or haven’t set other financial goals, and now all this talk about the stock market is making you take stock of your own money situation. If you don’t even know where to start, it’s time to take our three-minute assessment and get a free customized plan for your money.
Don’t Let Fear Rule You
Above all, remember not to let fear of the unknown control you. You have the power to decide how you’ll react. Don’t drain your checking account buying an endless supply of water, paper towels, and face masks the U.S. surgeon general has said you don’t need.2 Despite what you see shared on your social feed and what the talking heads keep drilling into you, there is always hope. And guess what? You can rise above any panic-filled sound bite you hear on the news.
The Bible tells us, “Therefore do not worry about tomorrow, for tomorrow will worry about its own things. Sufficient for the day is its own trouble” (Matthew 6:34 NKJV).
That means there’s enough things to deal with today. Don’t spend your time worrying about all the “what ifs” and whether or not the sky’s going to fall tomorrow, next month or ever. Focus on the here and now.
People can speculate all they want to, but in reality, none of us can control what the stock market or the world economy does. But the good news is, you can control what happens in the spending and saving habits of your own house. Keep working the plan, leave your investments alone, and wait for this to pass. But while you’re at it, go ahead and wash your hands (properly, for 10 to 20 seconds please)—you can never go wrong with that!
This article provides general guidelines about investing topics. Your situation may be unique. If you have questions, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros.