Suffering Through Your First Financial Crisis? Read This to Relax

WE’VE BEEN HERE BEFORE, AND EVERYTHING WILL BE FINE.

You already know the rational steps to take during a financial crisis: Don’t look at your retirement or investment accounts. Don’t stay glued to CNBC or the financial press. And, above all else, do not panic-sell your investments.

And yet: As Mike Tyson put it, everyone has a plan until they get punched in the mouth.

A generation of investors is experiencing its first genuine financial crisis. For many millennials — including yours truly — no amount of rational thinking can ease the pain of the first time you watch a fifth of your life savings evaporate in a few weeks.

To guide us through that pain, I called some seasoned investors who have been around this block before, having seen crises reaching back to Black Monday of 1987. They’re here to offer calm, perspective and a few tips on dealing with the crisis, mentally and emotionally. (Answers have been edited for length and clarity.)

DON’T LET EMOTIONS WIN OVER REASON

Mel Lindauer, co-author of “The Bogleheads’ Guide to Investing”: “The only two days that really matter in investing are the day you buy and the day you sell. All the ups and downs in between are simply noise. If you can learn to ignore the noise and stick with your investment plan, you’ll do just fine.”

Brian Preston, C.P.A., C.F.P., P.F.S., and host of the YouTube channel and podcast “The Money Guy Show”: “Creating wealth is simple — buy the market while you are young, and let compounding growth do its magic. However, wealth creation is not easy. You have to fight all of your human instincts and build a worldview that is separate from the herd. That is hard the first time you experience irrational behavior and whipsaw markets.”

Deena Katz Evensky, professor emeritus in the department of personal financial planning at Texas Tech University: “Panicking will only create more sleepless nights for you. Maintain a ‘buy and hold’ mind-set. The best thing you have going for you right now is time. Don’t try to time the market. You must stay in the market to get market returns. Remember, you are buying companies, not just stock. Businesses are still running and the world is still operating.”

TUNE OUT THE NEWS

Ms. Katz: “Stop listening to or reading financial pornography. If these guys were so smart, they wouldn’t be working for a living. Watching extreme volatility on a daily basis will give you ulcers and sleepless nights. A calmer long-term perspective will take you far. And don’t get angry or beat yourself up with ‘would have, should have’ — but remember that all investments have risk.”

Mr. Preston: “You can reach a certain point where staying up-to-date on the latest news and information is doing more harm than it is good. You’ve got to separate the actionable information from unactionable information; news about school closings or advice from health officials is good, actionable information. News about market drops or volatility can be valuable information, but not necessarily actionable. Much of the news about the market and coronavirus is great for staying informed and up-to-date, but may not be great for your sanity and financial health.”

Farnoosh Torabi, financial writer and host of the podcast “So Money”: “Unsubscribe from the push notifications. Why do this to yourself? There’s no value in getting daily market updates if your intention is to invest for the very long run. The market will have good days and bad days and terrible days. There’s absolutely no benefit in putting yourself on high alert with every move that it makes.”

DON’T LET JOB WORRIES CONSUME YOU

Alison Green, author of the book and blog “Ask a Manager”: “If you got laid off tomorrow, what things would you wish you had done in the last few months? Those are the things you should be doing now. For most people, that’s saving as much money as you can, shoring up your professional network and getting yourself in shape for a job search. That might mean polishing your résumé, renewing connections with your contacts, even testing the waters with a few recruiters. Short of launching a full-fledged job search, these are the things that will put you in the strongest position if you do get laid off.”

Ms. Green’s advice for freelancers: “The fear of losing work often drives freelancers to take on more work than they can comfortably handle in case some of it does disappear at some point, which means that freelancers can end up working too many hours and having horrible work/life balance. But if you have real concerns about work drying up during a time like this, it does makes sense to pad your schedule with additional work if you can do it, at least for a while. If nothing else, the extra income will give you a cushion of savings if you do end up in a dry patch later on.”

Ms. Green’s advice for college students: “The best advice I can give is to do everything you can while you’re still in school to position yourself for a job search when you’re out. Try to get part-time work in your field or as close to it as you can: do internships, do relevant projects, and make connections in the field you want to work in. Too many people still come out of school without having done those things, and it puts them at a real disadvantage. The more experience and contacts you can build up before you’re officially on the job market, the easier your search will be.”

Ms. Green on whether you should risk taking a new job: “It’s a risk to leave for a new company, but it can also be a risk to stay where you are since your current company could have layoffs too. Learn as much as you can about the stability of both companies. Talk to people in your field and try to get as much insider knowledge as you can. You don’t always need to hunker down and stay where you are during a bad job market; sometimes it does make sense to change companies, whether it’s for more money, a step up, or more stability. You’ve just got to make the decision with as much information as you can.”

REMEMBER: THIS ISN’T OUR FIRST RODEO

Ms. Torabi: “If we recall, the 20th century had its own host of problems and tragedies. It’s not that I encourage everyone to have all this blind faith in the stock market. Instead, have faith in the human race and its proven ability to adapt, invent, transform and make the world a better place. And that, in the end, is what fuels a strong economy and financial market.”

Mr. Preston: “This downturn does not feel any different to me than any other periods of panic and wild swings. Whenever I hear ‘new paradigm’ or ‘this time it’s different,’ I internally smile and know that we are humming the same song and that I have been here before.”

Ms. Katz: “Worldwide chaos and terrible news have been around forever, and somehow we live through it. Imagine what your grandparents felt during World War II or what your parents thought when President Kennedy was killed or the Vietnam War raged for years.

“There are two ultimate outcomes: We all get through this, or everything falls apart. If everything falls apart, it won’t matter. If we get through this, you have a pretty good chance of seeing things go back to normal, even if it’s new normal.”