Nothing Like a Global Health Crisis to Focus Attention on Investing Basics

As reported on businessjournalism in mid-February, the coronavirus outbreak in China has begun to affect retail markets  in the United States. The downward dip is likely to continue, which gives business reporters a steady stream of these stories to pursue in the coming weeks and months.

But this global health crisis should also prompt reporters to look at personal finance stories geared toward the average investor. In the last week of February, all three main equity indexes plunged about 13 percent, which officially put the financial markets officially into “correction” territory and added up to the worst stock market performance since 2008.

While the drop in the financial markets may be a strategic time for those with deep pockets to buy stocks, the average investor should take the long view and sit tight. That’s legendary investor Warren Buffett’s advice. His company, Berkshire Hathaway, earns an average annual return of 20.5 percent by investing for the long term. 

No doubt your readers have heard about the importance of long-term investing, by allocating their money among different asset classes, diversifying their investments, and regularly rebalancing portfolios, but there’s nothing like a crisis to focus attention. Reporters can help their readers find financial peace of mind by answering them one, or all, of these questions:

Are you invested for the long term?

Use your news organization’s social media channels and assemble a panel of readers across a broad demographic, from Generation Z employees working their first job to Millennials to pre-retirees in their fifties and those already in retirement, and ask them that question. Have a few Certified Financial Planners join your discussion to make recommendations on how to choose sound, long-term investments and answer reader questions. The Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA-CREF) offers a primer on these five principles of long-term investing. Another: This refresher from the Securities and Exchange Commission on investing basics.

Is your portfolio diversified?

All stocks, or all bonds, do not make for good diversification. Neither does investing in one sector, or type of stock, such as technology. Straight talk from personal finance “guru” Ramit Sethi on diversification will appeal to your younger readers. Nolo, which publishes legal books and software, offers information on diversification.  Read them both and fashion the information into a quiz to help readers.

When did you last rebalance your portfolio?

Short answer here: Not often enough. Most investors don’t rebalance at all, according to smart beta and asset allocation firm Research Associates in Newport Beach, California. A good rule of thumb is annually, or every six months in changing market. Ask your readers when they last rebalanced. Have the CFPs on your panel explain the process. Moneyunder30.com, a website founded and focused on investors under 30, offers a good “how to.”