It’s been hard to turn on the TV these last few weeks without hearing consistent updates on the Coronavirus. From its start in China in December, to news that it’s now surging in South Korea…and that Italy is putting their own quarantine measures in place, updates will continue. Your guess is as good as mine on how this all plays out (it took SARs about 9 months to run its course in 2003) but what we DO know is that what happens in China, now the worlds’ 2nd largest economy, and one our largest trading partners, CAN affect the rest of us.
So, whether we expect that best case, base case or worst-case scenario, what should we consider when it comes to our money?
- Buy ahead – Since China is the source of many of our goods, don’t wait until the last minute to run to the store (or Amazon!) for something important. With the mass quarantines in place over there, that means product is not being made…or shipped at normal rates right now. If something is important, re-stock it before you need it.
- Travel restrictions – Could this be the time to consider travel insurance? Or wait for that next big trip? You get to decide.
- Emergency Fund – Back to that. I feel like a broken record here but situations like this (and government shutdowns!) should remind us how important it is to have savings in place. If you were unable to work for weeks due to illness or a local quarantine, could you cover your bills?
- Review your investments and consider your upcoming withdrawal needs. Even in good times, we would recommend having the funds that you need in the short term FAR away from the stock market. Now is the time to think about your upcoming expenses and make sure to shift your money accordingly.
- Review your investments for international exposure. For those of you that have my help managing your investments, this is something we already do regularly but if that’s not you, pull out your statements and take stock of how much international stock exposure you have. Should that be paired back? To date, the U.S. market has not been impacted as much as the international markets. Again, that could change but it’s important that you know what you own, so you know what risks come along with it.
- Expect market fluctuations. Whether it’s because of the Coronavirus, the 2020 elections, or the late economic cycle we are in, the stock market could see it’s fair share of volatility this year. To date, our domestic market has stabilized after the sharp fall in January at the announcement of the coronavirus but there’s no telling how this could all play out. If you tend to get rattled pretty easily, that’s another reason to review your investments and stay away from the news!
If you’d like to dive deeper on this topic, and how this time compares to the SARS outbreak, click here for an update by JP Morgan: