What Do We Do Now?

 Key Points

  • The market gyrations earlier in the year separated investors from speculators.
  • It's a good time to assess what your risk tolerance really is.
  • A crisis good time to think about some other personal-finance-related items you may not have considered in a while.

Back in April, we wrote about staying the course as an investor. That is, in the midst of all the market volatility and the uncertainty caused by the pandemic, it does no good to be kicking yourself about having missed the warning signs and not getting out before the crash. If you're an investor and not a trader, you should have been prepared, with appropriate asset allocation already in place based on your goals and tolerance for risk.

But, OK, maybe you weren't as prepared as you thought you were, and now you're making amends. You're reassessing whether the potential for higher returns in exchange for such volatility is as appetizing as it used to be. Maybe it stings more than you remember it from 2008. It's going to happen again--maybe due to this virus or another virus or maybe something else, but it will happen again.

The markets have largely recovered, but the ride was rough.

Do all of that reassessment, definitely. Besides extreme market volatility, though, there are a few other personal-finance-related things to think about during these extraordinary times.

Inflation. Could it come back? The fact is, nobody knows. People have wrongly predicted its return for years. But by some measure its resurgence feels like it could be right around the corner. What would happen to your portfolio if that were the case?

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Social Security. Has the pandemic changed your thinking about when to start taking Social Security? Should it? And, to take it a step further, are you worried benefits might be reduced? It could be a good time to try out a few variations and see how they would affect your plan.

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Prolonged high unemployment. Many people plan to work part-time in retirement, at least in the early years. But what if that possibility goes away, or becomes a lot more difficult? There will almost certainly be fewer retail jobs than there used to be, for example. If you were counting on that, you might want to run the numbers on what retirement would look like without that extra income.

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