How Investors Should Respond To The Coronavirus


The coronavirus has affected the markets and you might be concerned about whether the virus will affect your portfolio. You might to speak with your financial planner as you look for ways to grow your wealth. There are several ways that the coronavirus can affect you.

How the Coronavirus is Different

Throughout late February, the stock market fell. Though the stock market has fallen, it is still much higher than it was five years ago. However, while other epidemics, such as SARS, had affected the stock market in the short term, they did not affect the market for an extended period. One factor that makes the coronavirus different is that it primarily affects China and this country has seen the largest growth before the epidemic. There are also many U.S. companies that perform much of their manufacturing in China. Therefore, the coronavirus might have a greater impact and may last for longer. 

Making Changes To Your Portfolio

Some investors have responded by selling from their portfolio to free up more cash that could then be used to purchase equities when they are at a lower price after a market correction. Therefore, you may need recommendations from a financial planner.

You may feel anxious and feel that they should still do something. You could balance your portfolio, sell bonds, buy stocks and start using cash that is currently idle so your portfolio is better prepared for uncertainty brought about by the coronavirus.

Leaving Your Portfolio As It Is

Sometimes, staying invested is a better option than purchasing bonds. While bonds might perform better in the short-term historically during a pandemic, stocks tend to perform better overall. Markets can sometimes be very resilient toward these events. However, it's still important to follow the news on the coronavirus and work with a financial planner so you can make the best decisions.

Investing in China

Those who are investing in stocks in China may want to diversify their portfolio more and invest in companies and regions outside of China as a hedge against volatility. Many investors have moved to countries such as Vietnam and Singapore. 

Another challenge is that the severity of the coronavirus is not clear because nations such as China and Iran have under-reported the number of cases. Additionally, because it's possible to become reinfected and because many who are infected do not show symptoms, it's important to keep up-to-date regarding the latest news involving coronavirus. 

For more information on financial planning and managing your portfolio during this uncertain time, contact advisors who offer fee based financial planning


16 March 2020

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