Always be ready for the worst
They don't call him an oracle for nothing. The multibillionaire said during an interview in March: "I've always felt a pandemic would happen sometime."
Last year, he warned that we were due for a "megacatastrophe." It would be some kind of "total surprise" that would dwarf devastating hurricanes Katrina and Michael, Buffett warned his Berkshire Hathaway company shareholders, in a letter.
He said Berkshire, which is big in the insurance business (it owns Geico and other insurers), would suffer massive losses — but would be ready for business the next day.
A good way for you to prepare for whatever comes is by buying life insurance to protect your loved ones. In just 90 seconds, you can find multiple life insurance rates tailored to your family’s needs and costing as little as $1 a day for $1 million in coverage, depending on your age and where you live.
Don't carry credit card balances
With layoffs skyrocketing during the outbreak and lockdowns, Americans have been piling on more credit card debt: 47% now carry balances, up from 43% in March, and nearly a quarter say they've taken on more card debt amid the economic crisis, a CreditCards.com survey found.
Turning to credit cards because of financial hardship is one thing, but Buffett says some people use them as "a piggy bank to be raided." He recently told his company's shareholders about a friend who asked what to do with a windfall. It turned out she also had credit card debt — at 18% interest.
"If I owed any money at 18%, the first thing I’d do with any money I had would be to pay it off," Buffett said he told her. "You can’t go through life borrowing money at those rates and be better off."
Whenever credit card debt seems overwhelming, a good first step toward getting rid of it is to scoop it all up into a debt consolidation loan — at a much lower interest rate than 18%.
Be careful with stocks
The coronavirus crisis is ravaging entire industries, including retail, restaurants and entertainment. Buffett has decided the damage to one particular industry is more than he can bear as an investor.
"The airline business — and I may be wrong, and I hope I’m wrong — changed in a major way," he said at Berkshire Hathaway's recent online shareholders meeting, to explain why the company sold off all the airline stocks it owned.
Buffett says people have been discouraged from flying, so "the world has changed for the airlines."
One of the carriers Berkshire dumped from its portfolio was Delta Air Lines, whose stock price has plunged by about two-thirds since the start of the year.
Buffett looks out for his shareholders the way a robo-advisor can protect a Main Street investor like you. These automated investing services automatically adjust your portfolio to give you some cushioning whenever individual stocks or whole sectors tank.
Stick to your long-term plan
Warren Buffett says he's confident the U.S. economy will bounce back from the COVID-19 pandemic.
"Nothing can basically stop America," he said at the virtual shareholders meeting. "We haven’t really faced anything that quite resembles this problem, but we faced tougher problems. The American miracle, the American magic has always prevailed, and it will do so again."
But he also said no one knows what's going to happen, so investors should brace themselves for a potentially long recovery.
"You’re going to get a fine result if you own equities [stocks] over a long period of time," Buffett said.
In other words, you need to hold on tight during times like these. A financial planning service can help you stay focused with your investments. Today, you can connect with a certified financial planner online and inexpensively, to keep you on track with your long-term goals.
Take advantage of low interest rates
Buffett became one of the wealthiest people on the planet by taking advantage of opportunities. He sees some fantastic opportunities right now, courtesy of the Federal Reserve.
"This is a very good time to borrow money, which means it may not be such a great time to lend money, but it’s good for the country that it’s a good time to borrow money," he told his shareholders.
The Fed "did the right thing" by cutting interest rates down to the bone, Buffett says.
For homebuyers and homeowners it's an excellent time to borrow: New and refinance mortgages are being offered at the lowest rates on record. Shop around and compare mortgage rates to land the best one you possibly can.