Investors have been on a wild roller coaster ride lately, as the government attempts to curb the coronavirus outbreak, and cushion the related economic blow. In response to increasingly stringent limits on travel and business activity implemented, the S&P 500 cratered more than 30% in mid-March from its February 19, 2020 all-time high. Then the stock market rallied over 10% during the week ending March 27, 2020 in response to the huge government stimulus package being enacted. Still, this left the S&P 500 index down more than 20% thus far in 2020.

This gut-wrenching volatility has put many doctors on edge. Worse yet, with most practices closed, or operating at dramatically reduced levels, doctors have substantially more time on their hands. Many are eager to do something, but not sure what to do. Here are three ideas. 

Avoid Making Emotional Decisions

Obsessing over the coronavirus news and its related economic impact can do more harm than good by triggering an emotional response to your investments. There’s no doubt that the market crash has been scary, but there’s no need for fear and panic. You need to take steps to control your emotions, so they don’t result in bad financial decisions. 

Doctors have suffered investment losses of hundreds of thousands of dollars during past downturns by “following the herd,” and selling out and going to cash and locking in their losses. No doctor ever reached financial independence by “buying high and selling low.” Remember, the only days that matter are the days you bought the stock and the day you sold it. Everything else is “noise” you need to ignore.

Consult With Your Advisor 

One key step in controlling your emotions is to discuss them with your investment advisor. Remember, you hired your advisor to help you develop a plan for your investments. Now you need to rely on that advisor to help you navigate the turbulent markets and avoid costly mistakes. Now that the storm has come, don’t make the mistake of pushing your advisor aside and try to “grab the wheel” since your hasty actions may prove disastrous.

Stay the Course, but Tweak the Plan

Your best bet is to stick with the investment plan you developed, but to work with your advisor to make small tweaks based on your particular situation, including your age and risk-tolerance. If you realize you’ve been overaggressive and need to become more conservative with your investments, don’t sell out and lock in your losses. Rather, you can reduce your target stock allocation without selling any stocks. 

Under one strategy, all new deposits that come into the plan are simply invested in fixed income securities thereby making the account more conservative without selling stocks and realizing the losses. This will allow your original stock investments to recover when the pandemic subsides and the stock market improves. Moreover, since any new money deposited is invested much more conservatively, you’ll feel more comfortable continuing to invest toward your long-term goals in this volatile market. Your advisor can also help you become more conservative by rebalancing your accounts.

Since your practice revenue is down substantially, your advisor can help you make changes necessary to conserve practice cash. You may be able to maintain your current investment plan through accessing practice lines of credit, existing cash, and/or CARES Act loans and grants. Alternatively, your advisor can help you reduce or eliminate retirement plan drafts, reduce 401(k) salary deferrals, reduce or delay 2019 retirement plan contributions, and/or even freeze your cash balance defined benefit plan before you reach the 1000-hour limit in order to conserve cash.

Remember, you’ve worked long and hard to get where you are today financially. Don’t throw it away by making hasty decisions based on emotion. Rather, maintain a disciplined approach to the investment plan you developed with your advisor, so that you can successfully weather the storm.