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The most important things to do with your money during the coronavirus outbreak, according to 5 financial advisors


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The coronavirus has officially been declared a pandemic by the World Health Organization, bringing instability to the U.S. economy. The stock market is hitting lows not seen since the 1987 market crash and hard-hit industries are beginning to lay off workers.

Health experts and governments around the world are urging caution, but it's also critical to be prepared for the outbreak to become worse. People across the U.S. are already stocking up on basic supplies in the event that they need to stay home from work for a prolonged period. Others are cancelling trips and foregoing conferences and sporting events.

CNBC Make It spoke to five financial advisors about what to do if you are worried about what the instability could mean for your money. First: Don't panic. Then, prioritize these four things.

Leave your investments alone

Most advisors say to leave your investments alone in times of instability and uncertainty. Now is also a good time to reevaluate your goals, says Ryan Marshall, a New Jersey-based certified financial planner, and make sure your investments align with them. If you are investing for a short term goal, like buying a house, and the market drop is too dramatic for you to feel comfortable, consider how you might change your strategy when things settle down. 

While you might hear the advice that "now is a good time to buy," Marshall says to disregard that. It's more important to invest on a consistent basis than to try to get a "deal."

It's nearly impossible to pick the bottom of any market correction.
Ryan Marshall

"It's nearly impossible to pick the bottom of any market correction," he says. "If you truly have a diversified portfolio, some of your holdings should be doing better with this recent market downturn. If everything in your portfolio goes up and down in lockstep, you probably aren't as diversified as you think."

In times of uncertainty, it makes sense to want to pause investing and instead keep your money in a "safer" place, like a savings account. But investors must overcome this impulse, writes Christine Benz, director of personal finance at investment research firm Morningstar.

"The fact is, you must be willing to tolerate some uncertainty — and indeed risk — in your plan if you want to outearn the inflation rate," writes Benz. "Over time, higher-risk assets, namely stocks, have returned substantially more than guaranteed and low-risk assets, and it's reasonable to assume that pattern will hold in the future, too."  

Another suggestion: Step away from social media and other fear-mongering news, says Alexander Koury, a Phoenix-based CFP.

"In every previous health scare, the markets reacted negatively, and over the course of three to six months after the initial shock, markets returned to normalcy, and in most cases the markets produced a positive return," says Koury. That said, gains are never guaranteed when investing, though historically the market has increased in value.

Increase your emergency savings

By far, your top financial priority should be ensuring that you have a sizable emergency fund, says Shaun Melby, a Nashville-based certified financial planner. This becomes doubly important because the U.S. does not have mandated paid sick leave. If you get sick and miss work, or lose your job because of the coronavirus, you'll need money to fall back on: Aim to put away three to six months' worth of expenses in a savings account

The most important thing people can do now is to make sure they have an emergency fund in place.
Shaun Melby

"The most important thing people can do now is to make sure they have an emergency fund in place and/or a plan to access lines of credit in the event their paycheck is affected by the outbreak," says Melby. "This sort of situation is exactly what emergency funds are put in place for." 

If you don't have three to six months worth of expenses saved, then it's time to make some sacrifices to increase your emergency fund. 

One savings suggestion: Make a list of all non-essential expenditures, including recurring subscriptions and memberships. Rank them in order of importance, then cut out the items ranked near the bottom of your list for a few weeks or months. 

Support others

If you are able, use your money to help friends, family and your broader community, says Michelle Fait, a Seattle-based fee-only financial life planner who focuses on the planning needs of single professional women.

"If you are healthy and it doesn't run afoul of local guidance for your area, continue to patronize your local businesses," she says, including restaurants, cafes and hair stylists, and tip generously. "These folks can't make up the revenue and income they'll lose while people stay home." If you are isolated, Fait suggests donating money to food banks. 

Consider getting family and friends in high risk environments, like hospitals and nursing homes, devices to stay in touch with people so that they are not completely isolated. At the very least, set aside time to FaceTime with the people you won't see as regularly.

Wash your hands

There's only so much you can do in the midst of an event like this, Tracy Sherwood, a New York state-based CFP, points out. So continue to be diligent about washing your hands.

"It's important to be informed and aware of the virus globally, in the states and locally in your community," says Sherwood. "However, try to stay calm, maintain perspective and recognize what's in your control."

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Bill Gates follows this part of Warren Buffett’s investing philosophy
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