My Lesson From March 2020 - By Miguel Delgado, CFPSubmitted by David White & Associates on April 9th, 2020
The only metric that matters is the progress towards your goals. An investment/ financial/retirement plan should provide you with a guide to get you through good as well as bad times.
When I heard about Italy placing all its residents on lockdown in early March, I never imagined myself in a similar situation. Yet, ten days later the U.S. national emergency was declared. Just a few days after that, my county and many other counties in California issued a “shelter in place” order.
It was around 11 a.m., March 16th, when I realized I was going home early and likely not coming back to the office. If I were to describe that memory in one word, I would use the word surreal. Still, it is a great blessing to be able to work from home, let alone still have an income from work at all.
As I sit in my living room in my pajamas, on a Monday afternoon, I reflect on the past twenty-two days of this lockdown. There are four things I learned this past month:
The point is, we all need someone to lean on, especially during these times.
Cooking is fun when you make time for it.
When it comes to finances and investments, in particular, the most important metric to monitor is the progress towards your goals.
Having cash on hand in addition to emergency funds is not only important, but it is also critical for investment opportunities.
We all need somebody to lean on.
My family has spent hours over the past several weeks watching “Master Chef Junior” on Hulu. If you have not watched it, I recommend you try it. It is a cooking competition between a group of children between the ages of 8 and 13 years old – each of which can outcook most adults.
The show inspired me to get my creative side going again in the kitchen. Of course, this was also possible because I have had more time available since spending my entire day at home.
The best result of this activity has been pleasure and unity. It gives me great pleasure to cook something from scratch, especially if it tastes good too. Seeing my family enjoy a meal I made is extremely rewarding. It is the unity created by home cooking, however, that brings me the most pleasure. Spending the time making these homemade meals brought the family together around the dinner table. Not just to sit and eat, but to check in with each other and talk about meaningful things about the present and the past.
So, if you are sitting there thinking to yourself that you’d wish you had more quality time with the family – try cooking for them with the condition of enjoying that meal around a table together. Encourage them to engage in meaningful conversation. Skip the small talk and make big talk (i.e. more meaningful/deeper conversations).
As you can probably imagine, my work has kept me extremely busy since the stock market began its decline in early March. I nearly lost my voice by the end of the month from all of the phone conversations and video conference calls.
Amid the chaos coming from the media, there was one important thought that stood out: While it is easy to focus our attention on the news, economic indicators, and stock prices; it is also easy to lose sight of the things we did to set our financial plan in motion.
When uncertainty clouds the market and we begin to see our portfolios drop in value, some of us often go into a reactive mode. This is normal, it is instinctive, and it is part of what makes us human. We see what is happening around us and it is important for us to make sure that we are going to be okay. So, we ask questions and make changes that we feel will in our best interest.
Here is the thing, if you have already established an investment plan or a more comprehensive financial plan, you have likely already made smart, responsible decisions when it comes to managing your money. Those wise decisions you made initially are what should be giving you the confidence that you need.
Put another way, the only metric that matters is the progress towards your goals. An investment/financial/retirement plan should provide you with a guide to get you through good as well as bad times. Believe me, for a moment I too had to stop and remind myself of this. I was more worried that I might miss a big investment opportunity to enhance my position. Maybe I did not buy the right stock at the right time, maybe I did not buy enough. Even if that were so, my goals do not depend on capitalizing on every opportunity. Sure, my portfolio has dropped in value by a large sum. But my plan accounted for this. This bear market was a normal phenomenon, as abnormal as it may feel.
Honestly, I agree these are scary times. People are losing jobs and more importantly, lives are being lost. It isn’t easy, but you still have some control and it is important to remember that. Remind yourself that we are all in this together and you will get through this.
We have all likely heard about the importance of having enough money for emergencies. Some say three months’ worth of expenses, others say six months or one full year. If you own rental property, you especially want to make sure you have enough emergency savings. Rental income is only as reliable as the tenant, and if they are unable to pay, you may need to rely on savings to cover any expenses of maintaining that property. Emergency savings are important. We can now see why that is so. However, I was reminded that having cash above our emergency needs is very important.
One frequent question I have been asked is, “How much cash should I use to invest during this down market?” The answer is dependent on how much cash is on hand and what amount of that is earmarked (or should be earmarked) for emergencies.
You see, it is unwise to take the cash that may be needed for emergencies and invest it. Having extra cash also allows you to spread wealth, not just create it. Having extra cash allows you to make a positive contribution to others. You can make donations, overtip restaurant workers or delivery service people. Giving feels even better than growing what you have.
Yes, I’ve made some personal investments during this time, but I have also given money to those who need it. Dulce and I committed ourselves to order food two or three times a week from local restaurants and we have tipped people handsomely. As a rule of thumb, I think people should always tip well, but even more now because hours are being cut, service has dropped and each service order counts. We have also continued to pay our babysitter for what would have equated to half the amount we would have paid because we care about her and her family. And we aren’t the only ones. My mother cleans homes for a living, and several of her clients have continued sending her checks. May God bless them.
This advice may be a little too late, but this will not be the last time our economy gets hit. If you were not prepared enough this time, let’s get it right next time!
Bill Withers died last week at the age of 81. He had several hit songs but I remember him most by “Lean On Me.” That song is very meaningful to me for different reasons.
You may not know this about me, but I once majored in Music. My instrument was the classical guitar. I developed such a deep inexplicable passion for the guitar at the age of 12. One summer, my parents enrolled me in a program called Youth Enrichment Program (YEP). My only memory of that summer is meeting a janitor that changed my life forever.
It was a hot afternoon and my friends and I were wandering around the school during our lunch break when we heard some music coming from around the corner. It was the sound of an electric guitar. We found the janitor playing his guitar in his janitor room. He was surprised we found him, but he asked us if we wanted to play. Next thing you know he was giving us daily lessons on different instruments, I chose the guitar. He got permission from the staff to have us perform a song for the parents and staff at the end of the summer. The song we performed was, you guessed it, “Lean On Me”.
The morning after I heard the news of Bill's death, I was talking to my wife about my memory of that song and what it meant to me. Our son, now 10 months old, was awake with us in bed. I pulled up the song on my Spotify and played it on repeat for about 30 minutes. My son loved it! We were singing, smiling, and laughing – it was beautiful.
I realized that I had been doing quite a bit of leaning on my wife during these times. She’s done a lot for me during these difficult times. I got sick and she took care of me. My clients needed me and she took care of our son, giving me the space to do what I needed to do. She and I have had some insightful conversations about our feelings, our parenting, and even our marriage - all positive things.
The point is, we all need someone to lean on, especially during these times. Reach out to your loved ones, your friends too because you love them like family. Lean on them, and give them a shoulder to lean on. I know this sounds cheesy, but I really mean it.
If you’re still reading this, I truly wish all the best to you. This is still your year, even if it does not feel like it anymore. If you need someone to talk to, call me 925-277-2635. Remember, you are intelligent, you are resilient, and you will get through this.
My best regards,
Miguel A. Delgado, CFP® | Partner
Miguel Delgado offers products and services using the following business names: David White & Associates–insurance and financial services | Ameritas Investment Company, LLC (AIC), Member FINRA/SIPC –securities and investments | Ameritas Advisory Services (AAS) – investment advisory services. AIC and AAS are not affiliated with David White & Associates.