Jamie-isms, If There Is Such A Thing

What day is it? Am I the only one who has lost track of time during COVID-19? My days used to be so structured starting with an early morning workout, full-day trip to the office working at a maddening pace, home to the family and the craziness that comes with an 8 & 11 year old, off to bed, rinse & repeat. Now, I’ve convinced myself that walking 18 holes of golf a few times each week with my son counts as a workout, we are just starting to re-open our office, and well, my kids are still crazy. The lack of structure has removed all personal/work barriers so the days just run together now. One thing that has been consistent – communication with my clients. In having regular conversations with different clients, I find myself using a lot of the same analogies and statements to make my points. Let me share a few, hopefully you find them to be relatable.

The Market and the Economy may be married, but they rarely sleep in the same bed. This has maybe never been more true than this past April. The world is realizing how devastating COVID-19 is from a health perspective, people are losing their jobs left and right, the economy has come to a complete halt, and the market had its best month since 1987. My take – if you want to understand how powerful $2.3 trillion dollars in government stimulus is, look no further! Oh, and don’t try to rationalize it. Accept the truth of this “ism” and invest for the long-term because no one knows what is going to happen tomorrow.

The path to peace of mind is paved in knowledge. So many of my financial planning clients have found an incredible calm in understanding their financial circumstances. Mind you, I said “circumstances” and meant both good and bad ones. For clients who allow us to do comprehensive planning for them, they sleep well at night knowing that their financial planning projections have provided a very clear blueprint for their investment portfolio. No one is speculating on the short-term nature of the market; instead, we have modeled all future cash flow needs taking into account taxes and inflation. From there, building a portfolio to support that, filled with the necessary allocation of capital reserves to meet the next 7-13 years of needs, is actually pretty easy – and our clients sleep well with this knowledge. For those with less fortunate circumstances, facing the realities of their situation and collaborating with us to develop a plan empowers them in a way that the majority of their stress is offset. Sometimes we curb savings for a year or two to deal with a reduction in income, or a debt that needs to be addressed. Confronting the issue and creating a plan – that’s not half the battle – it is the battle.

We can make an emotional decision or a logical one – it’s your choice. Health and wealth, they’re extremely emotional topics. When our emotions are amplified by both of them being stress points, we tend to make irrational decisions. That’s where a sound strategy comes in. Our clients are not immune to these emotions either. However, rather than let the headlines or talking heads on TV drive them to an emotional decision, we’ve fallen back on our financial plans, which provide a framework to make logical decisions. How many times have you regretted making an emotional decision, one driven by fear, frustration, or anger? Why would the outcome now be any better? Take a step back, gather all the data you need, and make an informed decision grounded in logic. Sound too hard? Find someone to help you. It might be a friend, colleague, or professional advisor. If it’s an advisor, make sure they are a fee-only advisor and you understand exactly what you are paying them – in dollars, not seemingly marginal percentages they so often quote as their nominal fee. (this link to PDS Planning is not a shameless plug, but a good place to understand the material difference between a fixed-fee and an asset-based fee)

The future is always the same. I know, this time it’s different. I beg to differ, and I state my case here.

By the way, I think it’s Friday.

Keep Calm and Invest On.

Jamie

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