Can You Pandemic-Proof Your Financial Future?

The economy is on the rebound from COVID-19, but science warns there might be more to come. Here are 9 tips aimed at helping you build a stable financial future.

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When the COVID-19 pandemic hit the United States, it affected the economy in vastly different ways than previous financial crises. In the past, manufacturing sectors were hit hard by economic downturns, but COVID-19 hurt the service, tourism, hospitality, and foodservice industries that depend on close personal contact with clients or crowds of patrons. It was a different breed of financial challenges.  

Even before social distancing shut down bars, salons, restaurants, and gyms, the stock market was already volatile and some investors panicked and tried to pull out of the sectors in the greatest jeopardy. Retirement funds coast to coast were hit hard. No one was prepared for what happened. The market is recovering, but many people were negatively impacted in ways they didn’t anticipate.  

Here are nine tips aimed at building more resilience into your financial foundation:

4 resilient investment strategies to consider

The economy can change rapidly! So, what can you do? How can you prepare for the next financial downturn, regardless of the cause? First, let’s look at investment strategies:

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1. Remember the tortoise and the hare:

When it comes to long-term financial stability, patience is key — slow and steady will often win the financial race. Don’t look at investments as a way to make a“quick buck” and get out. That’s also a good way to lose money! Instead, when you invest, be sure that you want to invest in the chosen vehicle and be prepared to ride out any bumps in the market. They will happen, and it’s best to go into the investment with that mindset.

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2. Adaptas needed:

Yes, you know that knee jerk reactions to financial blips do no good for anyone in the long term. That said, taking a “set it and forget it” approach to your financial planning — that includes all forms of insurance, retirement funds, stock market investments, bonds, and real estate may not be the best idea either. Be informed about your investments so you can make changes if needed.

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3. Diversify:

Investing too much of your assets into a single fund, sector, or instrument may not be wise. You may love mutual funds, but you should also consider other options such as real estate and commodities. The more your money is diversified, you can reduce your chances of losing it due to one crisis. Please note, however, that diversification does not guarantee a profit or protect against loss in declining markets. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio or that diversification among asset classes will reduce risk.

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4. Mitigate risk before you invest:

Every investment cycle is just that — a cycle.There will be highs and lows. A qualified financial professional can assist you in understanding the risks.

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5 ways to help protect your interests

Beyond investments, everyone should take precautions for the more “mundane” but possible impacts of a financial crisis, whether it’s caused by a pandemic or not.

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1. Haveat least a three-month cash reserve on hand:

This requires discipline. Having enough cash in reserve for three to six months’ worth of your daily expenses will help your family ride out most financial crises and high unemployment. That means having enough money on hand to pay for housing, transportation, education, food, insurance, and utilities for several months.

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2. Save your available credit:

If your career sector is affected, having maxed-out credit cards and no home equity will be painful. Keep your credit use low as a general principle so you have an additional cushion if the worst happens.

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3. Know that lending may be restricted:

No one wants to take chances when the economy is in bad shape, and that includes banks. Getting an unsecured loan or second mortgage may be difficult in a crisis, so you may want to consider having a plan to access additional funds elsewhere.

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4. Adjust your lifestyle if needed:

It’s hard for most people to downsize or downgrade, but sometimes it’s necessary. Look at all your expenses. There maybe places to save that you don’t even realize exist, and those could add up.

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5. Look for other income sources:

The side hustle has become a way of life for many people. Even those with six-figure salaries have businesses selling skincare, clothing, supplements, cosmetics, and food products. Adjunct college professors often have other lucrative full-time careers, as do athletic trainers, massage therapists, and other professionals. Side gigs can be a way to express a passion or turn a hobby into an income stream. It never hurts to have other ways to make a living!

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Financial uncertainty can be a tremendous stressor! No one expected the coronavirus pandemic, but a lot of people learned lessons from it. One of those is the importance of being careful with your financial planning and investments, as well as daily fiscal management.  When it comes time to invest and plan your financial future, it’s important to have qualified professionals on your side. The experienced financial professionals at Fortis Lux are ready to help you make the most of your portfolio! Contact us to learn more about how your money can work for you.

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