By nature investors are optimistic people. The very idea of an investment —time, money, or effort investment— requires a trust of the future and a gamble that the sacrifices of today will pay off in the future. If you are a person that has invested their money or have planned carefully for retirement, you might be wondering about what’s next or how the next few months might affect what you have done so far.
The first half of this year blind-sighted an entire population that was practically robbed from a normal summer and forced to contend with vast changes in their personal and professional lives. From business owners to students, to entrepreneurs, real estate agents, and everyone in between was caught by surprise when everything essentially shut down for a few months. The virus affected everyone in some way or another and if you are about to retire
The Shifting Trajectory of the Economy
The pandemic seems to have shifted the economy from one that seemed exceedingly robust to one of severe recession. It seems that gradually things are slowly picking back up as economies open back up and people return to work and school in some capacity. In a matter of weeks, the economy that promised to be a winning ticket to the current administration’s reelection went bust in the blink of an eye.
When it comes to profitability, investors will need to have some faith in the system and the resilience in the country. Many predict that corporate earnings will begin to rise steadily by 2021.
If you were in the midst of setting up some kind of investment portfolio, looking to buy new property, or secure your money in some other way, this might look like a time of massive uncertainty. To a certain degree it might be, but good financial advising and wealth management in these times is key to avoiding blunders and maintaining confidence in a system that is likely to recover. Unlike other recessions, this one was self-imposed and was not caused by a natural blip in the market. Instead, it was caused by forced government shutdowns that prevented people from going to work. The political tensions building because of the election will also likely impact the prolonging of some of these changes. Yet, the U.S market is strong and the people are wanting to get back to work.
Having Someone Help You With Investments and Wealth Planning Ensures You See It Through
Investors know that there are costs to managing your own money, including types of ‘hidden’ costs that occur when people miss opportunities or hold on to losing stocks. If your investment portfolio is not performing exactly the way you planned, this might be the time to recalibrate some important financial decisions. For example:
Are you making goal-based decisions with your money?
A wealth management expert can guide you towards diversifying and ensuring that any financial moves are goal-oriented to reach what you want most.
Is your portfolio diversified?
Having a diversified portfolio and rebalancing it regularly help you avoid volatility.
How The Economic Downturn May Affect Retirement Plans
Retiring at 65 was already a shifting goal post. For many people, retiring at 65 seemed to be getting further and further away and for others, continuing to work past this age was something they looked forward to. The economic downturn brought about by the forced government shutdowns and massive loss of jobs might change that for a lot of people. A survey conducted by Allianz Life Insurance found that half of Americans retired earlier than expected. Most of the people that responded said that the decision was out of their control: 34% of these cited job loss and 25% health care issues.
So experts are predicting that the downturn will affect retirees in one of two ways: they will either be forced to retire early or will have to work even longer to catch up. And yet, don’t panic. The economy will likely find its way back up soon enough.
When making financial decisions, however, refer back to your time frames and the plans you have made with your advisor. For most people, coronavirus will shake things up in the immediate markets but your retirement accounts will likely not be touched for some time.
So while there is a lot of uncertainty and quite a bit of upheaval, let us remember that the world has never stayed the same, and even after life-altering events like world wars, housing bubbles, economic crisis, and more, the world continued to turn and the market continued to bounce back. What’s important is that you have some financial plan and that you are sticking with it. If you do not have a financial plan, find someone that can help you with wealth management and planning, so that you are not caught off guard.
Here at Herrera Group, we help people reach their financial goals through consulting and guidance.