Stocks are sinking under the weight of the Russian invasion. The S&P 500 is down 12%, while the NASDAQ is off 18%. It’s a tough time to own stocks. Should you sell? Here is a quick checklist to help you make a better investment decision.
- Do you need the money?
- Do you have an emergency fund to cover three months of expenses or more?
- Is your time horizon five years or more?
- Are your assets diversified across stocks, bonds, and cash?
- Do you own a balanced portfolio of low-cost mutual funds or ETFs?
- Did you sell stocks in March 2020?
- Did you sell stocks during the fourth quarter of 2018?
- Did you sell stocks during the Great Recession – 2007 to 2009?
- Did you sell stocks during the Tech Wreck – 2000 to 2002?
- Did you sell stocks on October 19, 1987?
- Did you sell stocks when Russia invaded Syria?
- Did you sell stocks when Russia invaded Crimea?
- Did you sell stocks when Russia invaded Chechnya?
- Did you sell stocks when Russia invaded Afghanistan?
- Do you have a financial plan?
- Do you have a family will or trust?
- Do you have adequate life insurance to protect your family?
- Do you have disability insurance?
- Do you own long-term care insurance?
- Do you study balance sheets, income statements, and cash flow statements if you own stocks?
- Do you own any stock that accounts for more than 25% of your assets?
- If you have children, are you funding their 529 education account?
- Are your monthly debt payments less than 38% of your gross income? For example, if you earn $10,000, your total debt payments should be less than $3,800.
- Are you contributing to your company’s retirement plan?
- Do you invest 10% of your income?
- Do you donate 10% of your income to charities, non-profits, or organizations you support?
If your financial and estate plan are current and you don’t need money, consider staying the course. If you have an emergency fund, your assets are diversified, and you’re investing regularly, consider staying the course. If your life and disability insurance will protect your family, consider staying the course. If you did not sell stocks in March 2020 or during Russia’s previous invasions, consider staying the course.
If you need money, you don’t have a financial or estate plan, your time horizon is less than one year, or you sold stocks during previous corrections, consider selling your stocks.
I don’t know where the market is going in the short-term – too much uncertainty. However, stocks will recover. It might take a few months or a few years, but stocks have rebounded from previous corrections. It takes patience, courage, and a plan to create wealth, and it’s challenging to amass wealth if you panic and sell when times are tough.
Courage is being scared to death and saddling up anyway.” ~ John Wayne
March 8, 2022
Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management, located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.
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