Your Financial Future

Your Financial Future

The economy has been affected by this pandemic like no event before. The crisis was caused by a virus, not a financial crash like 2008. This has become a financial crash, and we will have to deal with recession. You cannot shut down many of the businesses in the country and avoid this outcome. The deficit is rising even faster than before. We will have to deal with this situation in the not too distant future.

We are seeing the majority of Americans working together to overcome this huge situation. We always do when we are attacked. The best medical minds are making progress on defeating the virus. We will continue to see reported growth in new cases for a while because we are doing much more testing. Everyone can do their part by staying out of groups, social distancing, washing your hands often and other similar protocol.

Washington is showing some bi-partisan cooperation on both the monetary and fiscal front. The Fed has lowered interest rates to near zero and is providing liquidity to financial systems. Congress has agreed in principal to the largest fiscal stimulus in the history of the country. It is expected to be $2 trillion dollars. It will provide income to many families, enhanced unemployment compensation, and low interest loans to small and large businesses. Cash will also be available to meet health care cost to defeat the virus.

The economy will stabilize and start to grow. It will not immediately be as robust as it was in early February. The stock market is very volatile and has gone down over 35%. Remember, the stock market is the world’s biggest auction. If there are more sellers, prices drop. If there are more buyers, they rise. If you do not need the money now, take a breath. If you have a long enough time horizon, why sell now? You have already suffered a big paper loss. Everyone will need to do an honest personal appraisal of their financial condition at some point. Does it have to be right now?

Often when someone loses a spouse it is suggested by financial professionals that they only the most necessary financial items should be done immediately. Other decisions can be made in a few months later when things are less emotional. Maybe that would be good a strategy for you. No one knows if we have hit the bottom yet, but things will probably start to stabilize some.

Another thing too many people are doing is holding too much cash. This is dangerous. You put yourself at risk of robbery and what if you have a fire at your house. I advised some of my clients to get a debit card if they did not have one. This way they can access needed cash at any ATM machine and avoid long lines at bank drive up windows. Many retailers will also give you some cash back when you need to make a purchase. You only need to hold a little more cash than normal, not a lot.

The financial world is likely to be different when we come out of this pandemic. Many people were taking much more risk than necessary. Personal debt levels will have to be revisited. Everyone needs a written financial plan. This has been something that none of has ever dealt with in our lifetimes. We will conquer this, but let us learn to make our financial lives more enjoyable and less stressful. Stay safe.

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