My F&M

Your Top Four Finance Questions During The COVID-19 Crisis Answered

“I can’t handle watching my accounts go down anymore. I’m thinking of selling all my holdings."

“It feels like the world is crashing down.”

“This is all really painful.”

These are just a few of the statements we’ve heard recently as the country reels from the impact of the COVID-19 (coronavirus) pandemic. The virus has affected our nation and world in ways none of us could have imagined.

It’s normal to feel panic and fear at times like this, but you don’t want to make financial decisions based on these emotions. Doing so means trading long-term gain for short-term relief, which won’t benefit you and your family in the long run.

In the financial world, history has taught us that bear markets always have an end. We’ve learned this firsthand as we’ve helped clients successfully weather the financial storms of the 2001 dotcom bubble burst and the recession of 2008 and 2009. And now in 2020, we are helping our clients navigate this economic and financial storm brought on by the coronavirus pandemic.

Our financial advisors have been working with clients for over 20 years. Through all of the chaos and uncertainty over these last two decades, Foster & Motley has helped clients make wise financial decisions. Our goal is to help clients stay the course with their established financial plan in order to overcome difficult times in the markets. We are here to help you, and in this article, we want to do so by answering some of the most common finance questions people are asking during the COVID-19 (coronavirus) crisis.

Question One: “I’ve seen the money in my retirement account absolutely tank, and I am very concerned. I am considering pulling all of my money out of retirement to prevent further losses. Is this a good or bad idea, and why?”

Even though it’s concerning to see your retirement account drop, it’s generally a bad idea to pull all of your money out to prevent further losses. Here’s why: When you sell out of your investments at a market low or during a bear market, you make your losses permanent. When you stay invested, you allow your portfolio time to heal. 

In these situations, it can be helpful to consider your portfolio’s mix. Is your asset allocation appropriate for you? Everyone should understand there is a risk/return tradeoff in investing. Generally, the more risk you are willing to accept in your portfolio, the higher the expected return. Of course, more risk means larger portfolio declines in times like these. This is where a financial planner or investment manager can help you determine if you have the right mix of assets that meet your goals.

Ultimately, you’re adding unnecessary decisions every time you decide to get in or out of the market — and over the long run, it’s nearly impossible to accurately predict the right time to jump in and jump out. By attempting to market time, you run the risk of buying high and selling low. That’s why having the right investment mix is important.

Question Two: “How long will this bear market last? When can I expect things to get back to normal?”

We’re not very far into this bear market, and while we can’t predict for certain when it will end, we can analyze past data to help provide an idea of what to expect. If you’re concerned about enduring a bear market, here are some statistics to keep in mind:

  • A bear market occurs when stocks drop in price by 20% or more.
  • The average bear market lasts around 14 months.
  • Over the past 70 years, the average bear market declined by almost 34%.
  • The last bear market occurred in 2008, but it wasn’t typical — stocks fell by almost 57%.
Here are a few things to look out for that could help turn this bear market around:
  • Management of the virus turns a corner (essentially, if the curve flattens and life slowly starts to resume a sense of normalcy).
  • A vaccine is created (this will take time, but the market will react favorably once this occurs).
  • Stimulus funds are disbursed (these can help the market start to turn around).
  • Employment improves (workers are going back to work)

It’s natural to feel uneasy during times of market volatility. However, it’s important not to panic. If you can, use this time to take advantage of lower prices and focus on rebalancing your portfolio. History shows us that as long as you can ride out the waves, things will probably be okay.

Question Three: “If the government gives me free money during this crisis, what should I do with that money?”

In times of financial uncertainty, it helps to go back to the basics. If you receive money from the government, here’s what to consider:

First, cover your necessities. If you’re struggling to meet the fixed costs of your household, regular expenses, and debt payments, that’s first priority. If you need government funds to help with these things, make sure you apply them to the greatest need first.

Second, build up your emergency fund. A good rule of thumb is to have 3-6 months of living expenses saved in your emergency fund. If you don’t have that much stored away, you can continue building it up with the money you receive from the government.

Third, consider if you have been saving in your portfolio. Have you maxed out your contributions to retirement accounts? That’s a tax saving strategy. If you are already contributing as much as you can to retirement accounts, consider saving into a taxable brokerage account.

To recap: Once your basic needs are covered, your emergency fund is built up, and your retirement accounts are maxed out, you can use your money from the government to build up the rest of your portfolio.

Question Four: “My spouse and I are financially stable right now, but don’t know the long-term ramifications of this pandemic. Are there any financial actions we can or should be taking now to safeguard ourselves and our family?”

One of the best things you can do for your family’s financial future is to have a financial plan in place. Bad scenarios will occur in the market, but if you have a good financial plan, you won’t have that feeling of uncertainty when those downturns happen.

Why? A good financial plan has contingencies built in. Having a plan in place means you’ll know what to do not only when the market goes down, but when markets go up and become overvalued.. A wealth manager can help you construct a plan that aligns with your financial goals, partnering with you to help make sure your goals stay on track.

Another thing to consider: Do you have an investment policy statement? This serves as a road map for managing your assets. It outlines your goals, your constraints, target asset allocation, asset location (which accounts to own which investments in), and portfolio rebalancing methodology. A wealth manager can create a customized investment policy statement that serves as a game plan to maintain a disciplined approach and help keep your investment goals on track, despite any market volatility.


There is no doubt these are tough times for our country. But when we look back at the  recessions of 2001 and 2008, we can gain confidence in their financial recoveries. Don’t make any decisions now with your money that you will regret in 10+ years.

The question we have for you is this: Do you have a financial coach in your corner that is helping you foster wealth and make wise financial decisions that align with your goals? If not, we can help.

If you’d like to talk further, give us a call or schedule a meeting. We can review your portfolio, assess your risk tolerance, and begin to put together a financial game plan that helps you reach your financial goals.

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