We must be wiser

I consider myself to have grown up as part of an insulated generation at a very privileged time in history. Unlike my parents, I have never known what it is like to have food rationed or run to an air raid shelter in the middle of the night. I have not experienced hunkering down in fear, staying away from my friends, family and neighbors, only leaving the house for essentials.

It goes without saying that we are going through an unprecedented global health crisis, which in turn has culminated in the current economic and financial market turmoil we see on the news daily. Covid 19 however, may have been the trigger for the market meltdown, and the coming recession, but it’s not the sole cause. At the end of 2019 the markets were at an all-time high, we’ve been living in a fragile economy for a while where fundamental economics didn’t seem to matter anymore. In addition, we have not seen a recession in 12 years, and at some point, both a market correction and recession were inevitable.

The impact of this has been greatly masked since 2008 however (the global financial crash), because we have enjoyed one of, if not the longest bull markets in history, which has been largely kind to investors, relatively consistent, in an upward trajectory.

So where do we go from here?

Consider these strategies:

  • Now more than ever before a solid financial foundation is key, and that starts with a financial plan NOT an investment. Every investment plan should be backed up with a customized financial plan. Now is the time to reinforce the key objectives you are trying to achieve.
  • Focus on strengthening your cash flow plan, never has it been more vital to have an emergency fund of three to six months cash or near cash investments.
  • Consider refinancing existing debt, which in turn will boost your cash flow by lowering payments, or the amount of interest paid over the long term.
  • Make sure you are invested appropriately. Taking into consideration your personal appetite for volatility, and ability to ride out this storm without drawing down on investments.
    We will come through this but we must be wiser. As my clients have heard me say, “Your current financial situation reflects what you’ve done in the past but it doesn’t have to predict the future.”
  • Wisdom must be our guide as we emerge from this crisis

Stay Safe!