How a personal finance coach who stopped investing in 2020 started again

When the Covid lockdowns began last March, Melissa Jean-Baptiste felt uncomfortable. The market was in sharp decline, millions of people were newly unemployed, and the future was unknown.

This uncertainty prompted Jean-Baptiste, personal finance coach and co-founder of Millennial in Debt, to radically change his investment and savings habits.

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For a few months, she stopped contributing to most of her investment accounts and instead sent that money to her emergency fund. “I was like, ‘I just want to scoop up all my money and put it under my mattress’ because you don’t know what’s going to happen.”

In the summer, Jean Baptiste realized that the pandemic was not stopping and that she needed to “readjust” and make a new money plan. Here’s how she got her investments back on track.

After the market started to recover at the end of March and she saw his portfolio recover, Jean-Baptiste began to look for new investment options. “I never like to go out and do without doing research,” she says. Her goal: to reassess her risk tolerance and adjust her portfolio to help her be less nervous during market fluctuations.

In particular, she looked at ETFs and index funds, which are widely recommended because they are less risky than individual stock picking, Christine Benz, director of personal finance at Morningstar recently told Grow. Since index funds aim to replicate the performance of market indices such as the S&P 500, they also tend to be less volatile.

“A better way to start investing is actually really boring,” says Benz. “Buy a regular index fund or maybe a target date mutual fund. It’s not a sexy message, but it is a message that has been incredibly effective for many investors for many years. “

When she was ready to resume investment contributions, John the Baptist’s plan was “slow and steady”. She only put in what she was “ready to lose” in any given month due to market fluctuations at the time. This is usually the attitude that experts recommend you take towards riskier investments like buying crypto rather than long term investments, because in the long term the market has always recovered from stumbling blocks and continued to climb.

At first, the amount she was willing to invest was $ 200 per month. The following month, she increased the amount to $ 350. By October, she had opened a Roth IRA and was paying a minimum of $ 500 per month.

This kind of scaling can be smart, experts say. It’s important to start investing as early as possible, even if you can’t afford much to begin with. Small increases over time can have a powerful impact. “How do you eat an elephant? One bite at a time,” Evelyn Zohlen, CFP at Inspired Financial, recently told Grow. “How do you get to the point where you save 15% of your income per year?” One percent at a time ”.

Ivory Johnson, Certified Financial Planner and Founder of Delancey Wealth Management, says keeping a cool head during tough times is crucial. “I tell my clients, ‘We already have a plan. Let’s stick to that plan and try to take the emotion out of it, “” he said on Facebook Live with CNBC last year.

The pandemic taught Jean-Baptiste a lot about herself and her finances – and now she feels better prepared for future turbulence.

“Before chaos ensues, you have this plan,” she said. “You think, ‘These are the steps I need to take. It’s my fun money, it’s my grocery money. And then a pandemic struck. [People think,] “I have to survive, don’t I? “And so your desire to survive and your need to survive, obviously, is going to change the way you look at money and the way you use money.”

While she is still on the alert in case “the world decides to go crazy again,” her current goal is to invest $ 10,000 in a brokerage by the end of the year.

The article “How a personal finance coach who stopped investing in 2020 started again” originally published on Grow up + Acorns.