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Market downturns are a great time to invest.
We are experiencing something in this country that we have never seen before, where so many regular and often taken for granted ongoing daily functions and activities of living in the US, have literally ceased to operate. This without warning and unfortunately without many people prepared to cope with this situation either financially or emotionally.
The effects on the US economy from the COVID-19 outbreak will be varied. Some sectors will be hit hard. Other sectors will weather the storm OK, and some sectors will thrive.
Time will tell if the strong sectors will be enough to rescue the overall economy.
Longer term, we should see a gradual recovery once we return to a new normal.
Shifts in the economy due to the COVID 19 moment have already begun by exposing the areas of our great economy that have lagged in advanced technological improvements. Some companies, institutions etc. have simply refused to adapt to what has proven to be more efficient functionality, from a stewardship perspective. Those companies that are ahead of the curve, using tools such as cloud technology and alternative sources of energy will have greater exposure in well managed portfolios.
The government stimulus should definitely have some positive impact on the expected economic recovery. How much and for how long will yet to be determined. The quick decisive action by our leaders should help curtail the potential long term effects and provide a much needed psychological boost adding to the well being of the nation.
Families should follow what we recommended in the 2018 year long market correction, by re-focusing on the “Things That Matter Most”. Re-assessing your financial spending/savings habits would be a good start.
The best part of a Personal Financial Recovery plan is that the foundation is based on timeless principles of excellent financial stewardship.
A. Spend less than what you earn
B. Avoid the use of Debt (note some debt is necessarily permissible)
C. Build liquidity (cash for immediate needs)
D. Have a plan for long range retirement goals.
When applied properly these principles will produce the positive results expected for financial security. Establishing a plan is not easy for some people, so now would be a great time to get help from available resources, including a certified financial advisors.
Short term financial goals should start with reducing debt and beginning to save money for an emergency cash cushion. The quickest way to save money is to stop doing things that lose money. Living within your means is the key. When expenses exceed income, you must increase income, reduce debt or a combination of both.
In this unusual time, with incomes uncertain, start by re-focusing on the “Things That Matter Most” and search for creative ways on how to make ends meet.
Long term goals for a Financial Recovery Plan are exactly that…Goals. Most of us never establish goals and the few that do rarely execute them. One sure plan would be to start investing money over a long period of time. Gathered little by little it will grow. (Prov 13:11).
As debt decreases, add more to savings/investing. Have someone hold you accountable to this goal so as to increase the chances of execution by 90+%. Finally let compound interest and time help you build significant wealth.
Market downturns are a great time to invest. Over the long haul the market has historically produced the returns that allow you to build wealth. If you hit a cycle like now where you can buy in low with some cash surplus and simultaneously have an experienced money manager carefully layer those monies into the right sectors of the market, you will have an opportunity to yield some significant returns. Dollar cost averaging out of cash flow over the next several months is also effective if you do not have surplus funds now.
For more information, or to schedule a free financial consultation, call Life Stewardship Advisors at 717-560-2813.
Thank you, and God bless.