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April 30, 2020
“Don’t Panic”: Tips for Keeping Your Financial Investments Safe During the COVID-19 Pandemic
By Allan E. Cameron, EdD, CFP®, AIF®, Certified Financial Planner and Registered Investment Advisor, Strategic Financial Partners
The COVID-19 pandemic has created myriad concerns for advanced practitioners (APs) and other health-care workers, including worries about job security, exposure to the novel coronavirus, and ensuring continued treatment for their patients. They may also be concerned about their financial investments and retirement accounts during this downturn in the U.S. stock market. But with a consistent, objective approach, they can take steps to help keep their money safe.
To understand the best course of action for a retirement plan, it’s important to first understand how the pandemic is impacting the stock market. As Allan Cameron, a certified financial planner with Strategic Financial Partners in
Tennessee and a registered investment advisor throughout the Southeast, explains, there are two factors: short-term volatility and long-term expectations.
“Short-term volatility is driven by emotion, that is, greed and fear. When people see the market falling, they get fearful and they pull out, making it fall further and faster,” he said. “Longer term, the market is driven by earnings.
That is, when we’re investing in a company, we’re expecting it to have some tangible return to us. But we’re seeing companies like cruise lines, the airline industry, and the oil industry lose all their sales, which impacts their
long-term or annual earnings.”
Cameron—a 27-year veteran of the financial services industry with experience in providing retirement and investment advice to university and health-care employees—said that right now his clients are most concerned about whether their
invested money is safe and what actions they should take, if any.
“Of course, the answers are individual to each client,” he said. “[The safety of your money] is relative to how you are invested and if you have a good financial plan with your financial advisor. Work with your financial advisor…have
an objective approach, and don’t try to react to the market. Panic and fear are not an investment strategy.”
He also encourages investors to continue making contributions to their retirement plans throughout the pandemic, if possible, noting that “this is the wrong time to stop…when the market’s down 25%. You can [contribute] now, and in
a year, you'll have made that 25% on every dollar you put in today.”
On top of the pandemic stock market levels impacting financial investments, some health-care employers may have stopped company contributions to 401(k)s as part of their emergency staffing plan, and some health-care employees may have
been furloughed—all potentially affecting their finances and investments. In the event of a furlough, Cameron encourages taking advantage of government assistance such as unemployment but not relying on your retirement account,
if possible.
“Make your retirement plan your last place to go for assets. Try to go through your savings first if you need money,” he said. “Typically, what you want to do as an investor is buy low and sell high. Unfortunately, the emotion is people
buy high and sell low. And so, if you take your money out of the retirement plan [right now], you’re doing exactly that.”
Above all else, Cameron stresses the importance of remaining calm, maintaining a consistent and objective investing approach, and if you have one, asking for your financial advisor’s counsel during this unprecedented time in our nation’s
health-care and financial history. And if you don't have an advisor, Cameron suggests contacting the financial institution your 401(k) is invested with, or checking with your employer to see if you have access to an institutional advisor or someone on staff who can answer your questions.
“The most significant thing you can do is to not stop investing. Don’t let the market scare you out of investments,” he said. “And I can’t emphasize this enough: a good financial advisor will help you diversify and have a good portfolio
that will withstand these types of ups and downs.”
Read more from the APSHO Advance: Special COVID-19 Series
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