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Coronavirus fears spook stocks: Here’s how to keep a cool head and protect your 401(k)

By February 27, 2020Uncategorized

As the old saying goes, what goes up must come down.

U.S. stocks lost $1.7 trillion in market value over the past two days amid concern that the coronavirus outbreak will further damage an already slowing global economy.

If you’re worried about your retirement savings, portfolio managers have some advice: Stay the course and remain calm.

If you just can’t stomach the stock market’s losses this week, experts say it’s time to ask yourself: What’s my appetite for risk?

“One of the worst things someone could do is make changes to their portfolio in reaction to the last two days,” says Tom Plumb, president at Plumb Funds. “But if you think your portfolio is too risky, you should develop a new plan over the next three to six months.”

Here are four moves experts say could help protect your investments during volatile periods, such as the bumpy stretch caused by the coronavirus:

1. Review your investments

Pay attention to where you’re invested and which companies are most likely to be affected, portfolio managers say.

Daniel Milan, managing partner at Southfield, Michigan-based Cornerstone Financial Services, says the effects from the virus outbreak on the stock market will be short-lived and has cautioned his clients to not let fear drive their investment decisions.

“When dealing with a virus like this, it’s important for investors to review and re-calibrate their long-term goals,” Milan says. “If fear is driving you to make emotional decisions in the stock market, then that’s a sign that you weren’t allocated appropriately for the long term,” he says, referring to how investors chose to split their portfolio between stocks, bonds and other assets.

 

– Jessica Menton | USA TODAY