How to Handle Market Volatility, Manage Personal Finances During the Coronavirus Pandemic

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The coronavirus has essentially shut down the United States, with many businesses closing up shop and restaurants forced to shutter, with the  only options being delivery or takeout. 

And then there's the millions of Americans who have lost their jobs because of the pandemic.

So, how can Americans manage their finances? What about their portfolios?

With so many unknowns, it's easy to let anxiety build until it feels overwhelming--especially when you're cooped up in your home.

However, Sallie Krawcheck, CEO of Ellevest, has plenty of advice for investors and those just worried about their finances. 

She joined TheStreet to answer questions about your 401k, how she's handling the pandemic (Surprise! She can't wait to be able to go out to eat again.) And other questions. 

Watch the full interview for more.

Video Transcript:

KATHERINE ROSS:
The coronavirus pandemic has shut down everything from retail to sports and it's having an impact not only on our finances but also on our portfolios. Joining me to weigh in on how investors, and quite frankly everyone, should approach their finances during this pandemic is Sallie Krawcheck, CEO of Ellevest. Sallie, nearly 10 million Americans have lost their jobs in the past two weeks with more expected this week. What's your advice to anyone struggling to find work right now?

SALLIE KRAWCHEK:
Yeah, it's unprecedented, it's absolutely unprecedented. We can't look to anything in history for this type of sudden stop and these types of job losses, just like we can't look to any time in history for moving from a bull market to bear market so quickly. And, look, for those people who've lost their jobs, I'd say the actions to take this time, network, network, network, network, like you've never networked before. There is no shame right now in having lost your job. Look to industries that are hiring. There are still any number that are in the streaming business, for example, that are hiring, and recognize that some won't bounce back as quickly. And of course, absolutely, be taking a look at your expenses.

SALLIE KRAWCHEK:
The amount of money you can save might not be life-changing over the course of your life, but maybe life-changing now. Calling your cell phone company to get a deal, putting off as the government's allowing us to student loan repayments, talking to your landlord about deferring your rent, taking some of that time, when you're not networking, looking for ways to save money, what expenses can you cut out and what expenses can you renegotiate during this unprecedented time?

KATHERINE ROSS:
What's your key piece of advice for anyone looking to change or add anything to their resume at this point?

SALLIE KRAWCHEK:
Yeah. Well, look, it's also a time to take some free online classes. Some of the great universities are making their classes available. I happen to be on the board of 2U, so full disclosure there, but some of their short courses. This is the time to learn how to code. This is the time to learn about marketing analytics. This is the time to really take an accounting class. There's so much that's available online, some of which will go into your head and others of which is credential, taking the time and pushing it forward. That novel you've been meaning to write. Look, it can be hard to compartmentalize. I was just talking to my daughter. You need to give yourself some time to be nervous, to be scared, to cry, the worry, and then if you're able to put that aside and do something that will help put your career further forward on the other side of this and compartmentalize as aggressively as you're able to.

KATHERINE ROSS:
Should someone lower the amount that they're putting towards their 401k or keep it the same currently?

SALLIE KRAWCHEK:
If are able to keep it the same, whether it's in your 401k, whether it's your brokerage account and your investing account. I don't know when this financial downturn, this pandemic will be over. What I do know is that we have recovered from every single economic downturn in history and we've recovered from every single bear market in history. And typically, when you look back at these bear markets, these are the times you're glad you bought. It may go lower, there may be a better time to buy, but you can just see when we're sitting in the rocking chair on the porch because we want to not because we're forced to because of social distancing, in some way years, we'll say, "Boy, when I made those contributions in 2020," just as people do today for, "Geez, if you bought in 2008."

SALLIE KRAWCHEK:
Now, the truth is most folks don't know when that exact downturn is going to happen. Nobody foresaw this coming. Nobody will foresee that today's the day. And that's why if you're able to financially, if you've still got your job, if you've got your emergency fund in place, continuing to invest some amount out of every paycheck, not looking at the market, not making choices about it, but just being disciplined, having a plan, historically, has always, always paid off when you get to the other side.

KATHERINE ROSS:
One thing that I've noticed is that Ellevest has been very good about having financial advisors and other people come on to the Instagram Live to talk you through your finances. So, for you Sally, what are you advising clients to do during this economic downturn?

SALLIE KRAWCHEK:
So, first of all, we have committed to our community of El-raisers, as we call them, to answer every single money question they've got personally. So they can ask us a question in the DMs on Instagram. They can email us questions at ellevest.com. We personally answer them. We then take the questions and anonymize them and answer them in an article that we've got just running on our website, on our magazine page at Ellevest, and we're doing, as you mentioned, some days it's three o'clock, some days it's 12:30. But we've got out there, we're doing tons of Instagram Lives and answering again all those questions personally. And, looks, let the advice is different for everybody. I'd say the question we tend to get, the top two questions we get is around the markets. Should I buy or should I sell? And sometimes they're flipped and sometimes it's should I sell or should I buy?

SALLIE KRAWCHEK:
But there's almost, we see it again and again, always questions around, what should I do right now? And for most folks, again, if you've got the job, if you're covering your expenses, you have an emergency fund, the answer often is don't do anything. You are not a professional investor. The chances that you will see something that the thousands and thousands and hundreds of thousands, millions of professional investors making millions of investing decisions that you will have some insight as to whether to buy or sell that they don't have and hasn't already been priced out of the market is pretty incredibly slim. It may happen because you're lucky, but this, should I buy small caps now? Should I do something with Bitcoin? For individual investors, you just don't have all the information you need.

SALLIE KRAWCHEK:
Frankly, you could argue most people don't and so don't go play that big boys game right now because you tend to be on the losing end, particularly by the way, when you do it from a place of emotion, when you do it from a place of nervousness when you do it from a place of fear. That is just going to end badly. So don't look. I tell everybody if you're able to not look at your 401k if you're able to not look at your brokerage account, do yourself a favor and do not look.

KATHERINE ROSS:
Millions of Americans are expecting to get this $1200 paycheck, one-time paycheck, in their bank accounts. What do you advise these Americans to do with that? Should they put it to work in the market? Should they put it in their savings account?

SALLIE KRAWCHEK:
Yeah, I think it really depends on individual circumstances. For some people, they're going to need that to pay their bills, they just are, and so that goes to that. For some people who haven't built a three to six-month emergency fund, now you're realizing that, oh, this is why we do that. For some people it's going to be paying off credit card debt. I'm always surprised, frankly, by how many people who you think, boy, he or she has got it together. They're investing, they've got a great job, and then you find out they have X amount of money in credit card debt, and so for some people, it's going to be that and it's really taking those things in order. Do I wish everybody would take it and invest? Sure. But everyone doesn't have the luxury of that.

SALLIE KRAWCHEK:
And again, I think for those who do, if history is any guide when you invest in a diversified investment portfolio and we're on the other side of this, which we will be, I think they're going to be a lot of people saying, "Remember that 1200 bucks? Well, guess what it's worth now?" And in fact, to go back to a statistic that every time I say it, it's so mind-boggling, "If you had invested $1000 in 1900 and left it and allowed it to compound." And over that period of time, we had the Flu Pandemic of 1917, we had two World Wars, we had the Great Depression, we had the Great Recession, we had terrorist attacks on U.S. shores, we had the Cold War, we had Vietnam, we had Korea, we had inflation, we had stagflation, oh my gosh, so many bad things happened.

SALLIE KRAWCHEK:
Wow, what's that $1000 going to be worth? And I think most people would be like, "No, $10,000, I think." The answer is $57 million. Because of the power over time of having that money invested and allowing it to compound and earn returns on the returns and returns on the returns on the returns, and so on over time. Never underestimate the resilience of the U.S. economy, of U.S entrepreneurialism, of capitalism to figure these things out. Maybe everything isn't perfect about capitalism, but if you are able to invest and hold and compound, the returns to it over time have been extraordinary.

KATHERINE ROSS:
President Trump has said that the economy will come back better than ever. And I'm wondering if you see this as a big opportunity or is it more of a problem?

SALLIE KRAWCHEK:
Well, I have no idea what he means by that, but I think we're in a really important moment for, who are we? What do we as a society and in economy value? And it's one thing to have these discussions in a vacuum and it's another to be faced with this. We're a country where people don't have all the healthcare that they need. And while we think, "Ah, it's them, it hurts them. I don't want to pay for their heart attack," when you hit a situation like this where it's not them, it affects all of us, that if someone cannot afford to have the coronavirus test, if they can afford to have the test, but they can't afford the treatment, if they're not able to make ends meet and so go into the workforce and infect others, we're a society, we're not a group of individuals. And same with the safety net.

SALLIE KRAWCHEK:
There's been talk of universal basic income and there's a lot of debate to be had but essentially that's just what we did by sending these checks to people. So what is that safety net that we value as the greatest country, the most powerful country, the richest country in the history of the world? Who are we? I think about this often. Historically, despite all of that, we had been a country that is mean enough that we don't have mandated paid maternity leave. How can we be the only developed country, the only country besides Papua, New Guinea, that doesn't have the kindness of its heart to allow mothers who are producing and bringing up the next generation, which is vital to our economy and society, we don't guarantee them paid time off to get their child off on the right foot. How is that right?

SALLIE KRAWCHEK:
P.S., let me add, the paid parental leave pays for itself in a year. It's hard to think of that because we think of it as an expense when in fact it's an investment that if a mother and a father have time with a child early on in life, they're much more likely to come back in the workforce, so they're much less likely to end up on welfare. And so I think there's one thing about let's come out of it stronger than ever. Yeah, I think we will. Will we come out of it kinder than ever and kinder in a way that has a positive ripple effect on the economy? Again, with the mandated paid leave. That will grow our economy. And so I'm hopeful that we'll have some kind of reckoning of, now that we've looked this in the face, we've had this existential risk, who are we as people and what do we really value as a society when we step back from the easy infighting that can occur when you've frankly got too much?

KATHERINE ROSS:
That's a really good point and in a weird way kind of piggybacks off of something that I want to touch on, which is real estate because we're seeing a lot. This coronavirus is going to impact a lot. It could impact the way that we approach paid parental leave. It could impact the way that we approach cities since we're seeing New York, for example, actually surpass Italy if you're using Johns Hopkins' numbers in the number of cases worldwide. So I'm wondering, do you think that this will cause people to rethink living in cities and maybe impact the real estate sector?

SALLIE KRAWCHEK:
Well, it's interesting because you and I were talking and you're in your apartment in the East Village, and you're paying a lot for that apartment.

KATHERINE ROSS:
Yeah.

SALLIE KRAWCHEK:
And if that East Village apartment, I don't know if you have brothers or sisters, but a lot more than your sister's probably paying in my hometown of Charleston, South Carolina.

KATHERINE ROSS:
That's exactly where my sister lives.

SALLIE KRAWCHEK:
She is? Oh my gosh! How about that? That's crazy! That's where my family is! So, okay, so when you compare the amount of rent or the amount of the mortgage payment, the reason you are paying so much more for so much less space is because your East Village apartment comes with New York City. That's the park. And if it no longer comes with New York City, why in the world would you stay in New York City? And so I do I think it could really go either way. If we don't have a V shape recovery then why would I stay in New York and pay all this when my favorite restaurant, unfortunately, closed, when the wine bar closed, when my friends didn't come back from where they were during the coronavirus? And so let me have more space if we're all going to go to work remotely.

SALLIE KRAWCHEK:
But I could see it rebound the other way, which is, I don't know about you, but I am going out every frigging night when this is over. If there is a place to go, I will be on every plane, I will be in every wine bar, I will be in every restaurant. I am just kicking myself for things I didn't do before we got into this. So I think we can make that argument either way and I think what's really going to matter here is the shape of the recovery coming out of it, whether it's V or U or, God forbid, L.

KATHERINE ROSS:
Sallie, when we spoke a year ago you noted how hard it is to get women to enter the market. So let's put that in times of crises. Do you see more women, for example, signing up for Ellevest than before?

SALLIE KRAWCHEK:
Yeah. Well, look, what I'm really happy to tell you is our business of course has been impacted by the decline in the market, but our community is standing strong. We've actually had every week during this, every week of the company, net inflows. And what was sad to see is it, of course, for a couple of these weeks there had been record longterm ETF and mutual fund outflows for the industry and we've had inflows, long-term inflows. And a lot of that is because so many of the members of our community have recurring deposits. And as we said before, if you can afford to, just keep on making those deposits. If you can afford to, do not withdrawal right now. And so we're seeing our community stand really strong. We're seeing new clients come in. Not to the extent that we did a couple of months ago, of course. But if you had given me this environment, I would not necessarily have projected this kind of strength.

SALLIE KRAWCHEK:
And, by the way, the research has always told us that women have weathered these kinds of downturns as investors better than their brothers and husbands. And I think some of it is because we're busy, right? Now we've got a homeschool the kids and we've got the Zoom call and we've got the job, and I don't know who's making dinner at your place but it's me at my place. And we have so much going on, we really, just if it's not on fire, I'm not checking it right now. And so I do think the research tells us that women tend to check less and it's behooved them positively financially, historically. That's a lot of -lys that I just pulled together there. Positively, historically, financially. That was good.

KATHERINE ROSS:
Sallie, Jim Kramer and I have talked extensively about how social distancing is impacting us personally, so I'm wondering from your perspective, how's it impacting you? I know that you're going to go out every night once this is over, but right now?

SALLIE KRAWCHEK:
Yeah, I miss it. For Ellevest, was traveling probably two to three days a week taking our message around, nothing bad happens when women have more money. Right? This is good for all of us. We have for too many years patronized women around money as a society, had women thinking, "I'm good at investing. That's for him, not for me." Talking to women about how therefore we have without knowing it seeded our power, and so I've been running around the country, doing quite a bit of that and I miss all of it. Oops. That's working from home. And I miss the team at work. I miss the social part of it. But I'm sort of cracking up at myself because we just had a bit of work done on our New York City apartment and I told my kids, who are launched in their careers and doing their thing.

SALLIE KRAWCHEK:
I said, "Look, what I want is for us to have Sunday night dinner. It's my goal, as a family, we come back on Sunday nights and I want a Sunday night dinner." Well, be careful what you wish for, expand out what you wish for, because we're having Sunday night dinner and Monday and Tuesday and Wednesday. And so, look, I realize I'm in a very privileged place where I can work from home, where we've got at our company plenty of runway where we have a business that's responding with strength to this, I realize that privilege. And so recognizing that I'm really trying to embrace the gift I've been given of all this time with my family that I wanted and I got it seven times over.

KATHERINE ROSS:
Well, I'm glad they are at least with your family. But before I go, Sallie, I've got one final question for you and that's millennials have lived through a traumatic economic crisis before that we were told once in a lifetime and now we're going through a second one, so especially for millennial woman, what's your main message to help them feel a little bit better about their finances in this time?

SALLIE KRAWCHEK:
Yeah, look, what I would say is, these once in a lifetime happen once every 10 years. I mean, even when I very was a baby, baby, baby, the crash of '87, and there was the issues with Russia with that meltdown, and then there was the 2001 terrorist attack. So these things are happening every 10 years. That has not kept, as we were talking about earlier, the markets from trending upward over time. And I think a mistake we make, particularly as women, we tend to remember the pain more than the good stuff. And we tend to have a vision of the equity market as performing like this, when in fact it's performed like that. And so you've got a hold on the best you can. Obviously, if you've lost your job, et cetera, there's certain actions you should take, but if you're privileged enough to be able to stay in the markets, do.

SALLIE KRAWCHEK:
A couple of weeks ago, we were still seeing people, I was on Jim's show and when we talked about it, I said, "Look, Jim, for young people like you and me who are still buying equities in diversified investment portfolios as bonds, they're on sale. And so while it's hard to celebrate the fact that they are on sale, we should be celebrating the fact that they are on sale." And if you're in a place later in life where you're selling your equities, you're selling your investments, fingers crossed that you worked with a financial advisor who got your risk down as you got older, which is a real value an advisor can bring, so that while this can hurt, this is not a knockout blow.

KATHERINE ROSS:
Sallie, thank you so much for taking the time to talk to us today. And, of course, please head on over to thestreet.com for more on the coronavirus pandemic and its impact on the markets.

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