The economic upheaval caused by the coronavirus pandemic has dramatically reshaped global markets and commerce. Companies have adapted to remote work or reduced their workforce and governments have played a major role in temporarily stabilizing economic downturn.
In a recent Q&A with the Alumni Career Network (that you can watch here), UCLA Chief Investment Officer Justin Barton spoke about how this current economic crisis has affected individual finances and financial plans and offered some words of advice. “This is so different from other financial crises in that it’s not a financial crisis, it’s really a public health crisis,” says Barton, adding, “And that’s a really unique set of circumstances that a lot of us have not ever really had to deal with before.”
If you’re engaged in financial planning, you may find this to be a particularly confusing and volatile market. But Barton provides some key tips on navigating the current market.
1. Ask yourself some questions.
For one, you have to ask yourself what kinds of risk can you afford? “Where are you in your life cycle in terms of how much risk you can take? What is your personal risk tolerance? And that should dictate how much you want in equities, how much you want in fixed income and other assets,” he advises.
2. Don’t be hasty.
Next, Barton cautions investors to not act hasty by immediately selling. “I would say always have a cautious, patient, not panicky outlook when you see fluctuations in the market, especially if it’s retirement capital and capital sitting in things like 401ks or other tax-deferred structures, and depending on where you sit in your age range.”
3. Investigate all the options within your company.
And finally, he suggests that people take a good look at their retirement options within their companies. For those who work for a company that offers matching retirement, “you should really be contributing up to that match level,” says Barton.
4. Stay informed
But with so much volatility in the market today, every investor and financial planner should also keep up-to-date with the latest changing news, and there’s a plethora of trusted sources supplying information on financial markets. In addition to classic outlets like the Economist or the Wall Street Journal, there are a number of dynamic podcasts for people of varying degrees of financial savvy.
“There’s ‘Invest Like The Best,’ which is Patrick O'Shaughnessy; he's got some great guests to talk about investing in finance. ‘Capital Allocators’ podcast, hosted by Ted Seides. There's the ‘Freakonomics’ podcast, which is fantastic, and tackles a lot of just general economic issues and questions. And then NPR also has ‘Planet Money,’ which is fantastic. And ‘How I Built This,’ which is also just a lot of stories from entrepreneurs and business people.”
Regardless of where you are in your investments journey — if you’re just a novice, or a professional investor — keeping up to date on the latest financial news is a must.
Though it may be difficult to see past the current economic cloud, Barton reminds investors, “When we’re talking investing, in my mind it’s always at least at a bare minimum, a five-year view. And you really should be thinking 10-plus years if you’re investing in capital.”
“I think the value of not trying to time markets is something you kind of learn over your career. You think the market is going one direction, and it doesn’t always go the direction you think it’s going to go. So be patient, execute dollar cost averaging, and decide that you’re going to pace through.”
Watch the full 30-minute conversation with UCLA's chief investment officer, Justin Barton, below.