PORTLAND, Ore. — Anyone who's planning to retire soon-- or is retired-- has an eagle eye on their nest egg right now. It’s probably lost a lot of value with the wild swings on Wall Street. So, what’s a hard-working, regular investor with a company 401(k) to do?
That’s what I asked Brent Petty, President of Northwest Capital Management in Tigard. We’ve had him on KGW-TV a few times answering your money questions after COVID-19 turned the economy upside down.
“Right now, it’s definitely intimidating and a lot of folks are really uneasy,” he says.
#1 - Know what's in your portfolio
First, Petty says make sure your asset allocation and your risk tolerance is appropriate for your time horizon. Review your portfolio to make sure it has the right mix of stocks, bonds and cash.
“Owning some stocks probably makes sense because they're going to be in retirement for 10, 20, 30 years and we will get on the other side of this crisis and their portfolio will eventually recover. But they need to make sure they have enough money outside of the stock market so they can pay bills, cover mortgage and rent and what not -- their basic living expenses. Do they have enough money in secure types of investments to make sure if this drags on another six months or so, that they have liquidity.”
Watch Extended Sunrise Extra conversation from March 10th, 2020:
#2 - To sell or not to sell
“The market has been under pressure for several weeks and investors are asking, ‘Should I sell?’ Historically when the markets are down 30% or so it feels good to sell when the masses are panicking but usually when you get three, six, twelve months away from that period it’s actually not a good time to sell.
It’s probably a good time to stay in the market, if not put more capital to work. The market is trying to figure out if we’ll see a high water mark of net, new infections this summer and then after that the data starts to get better. Infections go down, we may be making some progress on preventative treatments, vaccines, cures and will we see the economy start to thaw in the second half of the summer? Will kids be going back to school in September? We think the market is appropriately priced for that kind of scenario. If, for whatever reason, that ends up not being the case then the market probably still has a ways to go before we find the bottom.”
#3 - Manage what you can control
There’s more to consider than just the stock market. Petty recommends looking more broadly at your personal finances.
“This is a very good time to make sure you have your estate planning in place. Is your will up to speed? Do you have medical power of attorney in place and directives in case someone needed to make decisions on your behalf? These are all things we should be doing periodically anyway.”
Petty reiterates investors need to be “disciplined” and “patient” especially now when news about the coronavirus and the market is challenging. He says if we get to the other side of this crisis in a reasonable amount of time there will be so much government stimulus in the economy that the market will likely bounce back pretty quickly.