Why a Pandemic Won’t Derail Your Investing

Well, I knew we were going to experience a stock market correction at some point. I didn’t know it would come courtesy of a worldwide pandemic.

On February 15^th I urged yall to invest. Less than two weeks later the stock market had its worst week since 2008. With coronavirus confirmed in America and spreading further the fear sent stocks (and index funds, and really most investments) tumbling down.

But these traders are worried for a reason. We’ve had several health scares in recent years with ebola, SARS, Zika, and swine flu at varying points. The coronavirus, however, has managed to spread much farther and affect several more people. We know it’s 400 times deadlier than the flu. We know it disproportionately affects the elderly, sending the fatality rates even higher. We also know you might not realize it’s coronavirus, given that its symptoms mirror that of the flu. And that the only thing you can really do to protect yourself is keep your hands clean.

Same thing goes for the virus’s effect on investments. The only thing you can really do to protect yourself is by keeping your hands clean there too. That means no selling your index funds, even if they continue to lose value over the coming weeks or months.

Coronavirus Won’t Cause Bankruptcy

“Buy and hold” is still my financial strategy in 2020. My investments are still north of six figures at the time of this writing, but several folks’ are not. Only time will tell if mine will actually go back to five figures or not. It still might, as I saw my net worth peak at $125k in February and fall down to $105k today.

“THAT CLEARLY MEANS EVERYTHING FAILED AND YOU NEED TO SELL IT ALL TO PROTECT WHAT YOU HAVE LEFT RIGHT?!?” screams the poor terrified dude ready to bust a blood vessel.

Hell no! Regardless of the “losses”, I’m still not worried or even nervous. I mostly just check my net worth to see if I’m still above 100k. If I am, as I’ve been so far, that’s nice. If I log in later this week and see that’s changed, I think the most I’ll do is say “aw” and do a crossword or something.

Which is to say: YOU SHOULD START INVESTING YESTERDAY, IF NOT TODAY.

In fact, this is an even better time to begin investing if you haven’t yet.

Why This Is (Financially) Normal

Here’s why it’s still a good time to invest: we know the stock market, over time, will always go up. If it ever stops going up, that means humanity has stopped building and innovating, which is much more concerning than numbers on a screen. The reason people don’t jump on this opportunity is because of the dips that the market experiences. These never last and always recover to their previous highs (and then some) but are enough to spook potential investors about “losing money”.

For the record, guys, if you ever actually lose money by index fund investing it’s because you sold at a loss in a panic. Index funds are essentially betting that humans will continue to build and innovate, which we will. Don’t lose sight of the whole forest ahead of you because you came across some felled trees. You don’t want to collapse weeping at the fallen wood when there’s a whole bounty of it beyond your current position.

Knowing it will go up means that the stock market price drops is actually a good thing for a long-term investor. These stocks are now on sale for a lower price, which will regain their value and continue to grow for several years yet. There are several smarter people who explain why this happens better than I can, including JL Collins and Pete Adeney. So for those of us who are still building our wealth, this is both par for the course and a nice boost to our future returns.

Coronavirus Isn’t 2008, Part II

When you see your index fund investments dip, it doesn’t mean you suddenly don’t own what you did before. The shares of publicly-traded companies that you own are still there in your account; you haven’t lost that value. The only way you’ll permanently lose it is if you actually go in and sell them off. Which, since you’re in this for the long haul, you’re not going to do anyway.

The effects of coronavirus on our economy are already widespread, from affecting office closings and self-quarantines to sending toilet paper sales sky-high. It might permanently change certain traditions and practices, like making companies shift to having workers work remotely most days instead of being in an office. Coronavirus could have a potential silver lining amidst its carnage and destruction so far, as did several other catastrophes in human history.

Now, I don’t know what exactly that will look like. I don’t even know when my investments will stop falling and start climbing again. The only thing I do know is that it will return to its previous highs. When that happens I’ll have more shares of the S&P 500 than I did before, thanks to my steadily buying more indexes as my paychecks come in. This is yet the latest storm that we must weather, and I have an unshakable faith in our ability to get through this. Which, of course, includes faith in my long-term investment performance.

What’ve been your fears and worries about the effects of coronavirus? I hope you remembered to grab extra hand sanitizer and TP at the store; I hear it’s brutal out there. Stay safe! And wash those hands!!