As the coronavirus spreads, worry is overtaking financial markets and the economy.
Stocks alternate between swoons and surges, trips and events are canceled and fears of a recession are growing.
On Wednesday, more bad news emerged. The Dow Jones industrial average dropped 1,464.94 points, adding to its recent losses and leaving it more than 20% below its record high from last month, a milestone that put it in bear territory for the first time since the financial crisis 12 years ago.
Investors may struggle with the question of whether now is the time to buy or sell stocks as prices continue to plunge. But despite the market’s downfall, personal finance experts say investors should sit tight and stay calm.
Here’s their top advice for turbulent times in the market:
It’s best to avoid panicking. Every stock market downturn has been followed by a rebound. Investors should take advantage of the market opportunity to buy stocks priced lower than usual, experts say.
“The market is giving you an opportunity to buy select companies at better prices then you were offered a couple of weeks ago. If you have the time horizon of more than six months and you have the capital to put to work then it’s a great time to buy individual things that are really well-priced,” said Charles Lemonides, founder and portfolio manager of ValueWorks.
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Build up your cash for emergency savings
If you’re inching closer to retirement, it’s important to have cash investments stashed away for living expenses. Having cash on hand will ensure you don’t have to sell in a moment’s notice of a crisis.
“History says a bear market can go deeper and last longer than you might think. It’s wise to have a substantial amount of your money in liquid assets if you’re already in retirement and know you need to withdraw for living expenses,” Terry Savage, personal finance, economy and markets expert, author of “The Savage Truth on Money.”
Increase your retirement contributions
Job-secure retirees who’ve saved enough in cash reserves should think about increasing contributions to their retirement plans. Due to market conditions, the share prices of many mutual funds or ETFs that you may already be buying through your 401(k) are at lower prices.
“Take advantage of this opportunity to get more shares for the same amount of money. This is a proven way to help build wealth in times of volatility,” said Jimmy Lee, CEO of The Wealth Consulting Group.