It has been almost four months since many of us started sheltering at home. It has been five weeks since George Floyd tragically died. It seems like a lifetime ago when things were “normal.” The impeachment hearing was irritating, but we all knew the outcome. The economy was humming with unemployment at record lows. The stock market was soaring, hitting an all-time high in February. Yes, we had issues around economic inequality, racism, health care, education and more, but for those of us not overtly impacted adversely, we could almost pretend they didn’t exist.
And then the virus came, George Floyd was murdered, and the world changed:
- We fear for our health and the health of our loved ones. Suddenly, we were in the midst of a global pandemic where everyday actions of the past, like shaking hands or dining out, took on new levels of risk. In the U.S., we have had more than 2.6 million cases and more than 128,000 deaths as of June 29, 2020. What risks are we willing to take?
- Our economic security now feels threatened. Our portfolios plunged over just a few weeks, and largely recovered almost as fast. Are we really back, or is the next plunge right around the corner? Unemployment has gone from record-low to record-high levels. The government has literally spent trillions keeping the economy afloat. We know the virus will pass, but what will be the long-term impact on the economy?
- America’s challenges around race and income inequality rose to the forefront of our collective consciousness. George Floyd’s murder unleashed a torrent of pain and anger not only in the Black community, but also among many sympathetic whites and other people of color. We are hearing story after story about how all Black people (regardless of education, occupation, or socioeconomic status) regularly confront the humiliation and scourge of racism. We can no longer pretend these are isolated incidents. How can we make sure we no longer look the other way?
What now? Between COVID-19, the economy, and the increased awareness and anger around racism, we are asking ourselves, “What now?” What action can I take? What action do I want to take? Each of us must answer these questions for ourselves. Figuring it out can be overwhelming. So, here are some questions to get you started.
What is the right level of social activity for me?
One day the virus seems to be contained; the next day it seems to be getting worse. How do we balance staying safe and living life? Balancing that risk and reward is an individual question; there is no one-size-fits-all.
How do I protect my financial security in these volatile times?
For many, the answer is to stay the course. More often than not, making changes to a well-thought-out portfolio in the middle of a storm turns out to be a mistake. It’s easy to overreact to short-term events and forget about the resiliency of the markets and the economy, but doing so is a mistake. Said simply, we run the real risk of selling low and buying high.
Many are facing a much more difficult challenge such as losing your job or your business. In those cases, you may need to consider increasing your cash reserves, reducing expenses even further, and consider how to protect yourself if things get dire.
How do I stay the course?
Staying the course is not easy when the world and the markets are in turmoil, but it’s important to remember these three things:
- You are prepared. You have probably been saving money for years in anticipation of the inevitable rainy day. Even though we are in a period of high stress, if you have been working with an advisor, your financial plan should have prepared for periods of volatility like this.
- This isn’t the first challenging time. America has been through difficult times before and survived. In many cases, the markets have more than survived; they rebounded stronger than before. As an investor, you might have navigated those prior challenging moments using more than money, relying on things like your time, talents, wisdom, and intelligence to figure out what to do. The support of family, friends, and colleagues in challenging moments likely got you through. This is just another challenging moment, and we can rely on those same intangible resources as we work our way through this storm.
- Emotions are powerful. This is a scary time. It’s normal to be anxious, frightened, and nervous, but we can’t logic our way to feelings of peace and serenity. It’s important to acknowledge our emotions and work through them before moving on.
What changes, if any, do I want to make to how I live my life?
Our lives have been disrupted, but this powerful moment is an opportunity that won’t last long. We understand that the world can change in a moment, and our lives will inevitably change with it.
In most cases, we experience life-changing moments individually. A death in the family or a new baby changes our lives, but for the rest of the world it is life as usual. Today, we are all experiencing some state of flux. It is a unique moment where we can talk to others about our shared experiences and use the power of conversation to self-discover as we self-disclose.
When our lives are disrupted, we see the world with a little more clarity. During moments of disruption, we have the chance to consider what matters most to us. A great life lies at the intersection of meaning and joy. We realize that time, our most precious resource, is flying by. We feel a sense of urgency to live our lives on our terms.
Are our lives aligned with our values? Are we doing what we really want to do? Are we focusing our time and attention on what matters most to us? Ten years from now, will we embrace or regret how we chose to live our lives from this point forward? Seize the moment. Take some time to consider the life you want to create and the future you want to build.
Include your advisory team in these conversations. Your advisor can help provide a broader financial perspective, sharing with you some of the wisdom gained from similar conversations with others. Most importantly, our advisor teams promise to listen without judgment and with compassion.
New beginnings are often born out of moments of turmoil and pain. May we all use the pain of 2020 as a springboard for a better future. Stay healthy; stay strong.
CFP® David joined Wealth Enhancement Group through the partnership with JOYN Advisors, where he acted as CEO and Co-Founder. He is the creator of the Behavioral Wealth Management™ model. A model that focuses on aligning wealth management with the integration of human emotions while taking into consideration an individual’s talents, wisdom, network and relationships. David has been featured in a number of prominent outlets including The New York Times, The Wall Street Journal and The...Read More