The plan is the path
None of us planned for the coronavirus pandemic. Whilst at the start of the pandemic some of us might have thought normality would return after a period of disruption, the government’s introduction of the “rule of six” shows just how far we are from normality.
The markets might currently be performing well. However, should further market turmoil come, the key is not letting heightened emotions and bad headlines steer you towards bad decisions, the kind that could have a negative impact on your finances long after this crisis has passed.
Easier said than done, right?
These three steps will help you remember why you have a plan in the first place, what it’s designed to help you accomplish, and how we can help should we see a repeat of the market chaos we saw back in the late winter and early spring.
1. Acknowledge your emotions.
When markets spiral downwards, you probably feel worry, anger and nervousness. You might even let forth a disbelieving chuckle or two at the craziness of it all. Whatever market turmoil and the pandemic make you feel, it’s okay. We understand that your financial concerns are just one part of a very complicated and very personal situation involving your family, your work, your health and your basic needs. Add in the anxiety we’re all feeling about the situation in the wider world and you wouldn’t be human if your emotions hadn’t been a bit jumbled for the last 7 months. We understand that any more disruption will likely heighten all this.
If there’s further disruption, we’ll probably tell you to avoid making any rushed, emotional decisions. Please understand that when we advise you to take emotions out of your financial decision making during a crisis, we’re not advising you to ignore what you’re feeling.
On the contrary, we encourage you to talk through your feelings with your spouse, children, co-workers and other close friends or family. Burying your emotions only makes stressful situations more stressful.
Our human capacity for empathy, understanding, connection and mutual concern help us weather the most treacherous storms. These capacities also lead us towards healthier and more productive outlets for our feelings, such as charitable giving and finding creative ways to support local businesses as the economic consequences really hit home.
We’re beginning to see further redundancies because the furlough scheme is coming to an end. Think about how you can help mitigate the pandemic’s economic devastation in your local area, which could be even more pronounced should further market chaos ensue.
2. Remember your overall goals
Once your feelings about market turmoil are out in the open, it will be easier for you to think about the financial part of your situation with a clear head. Keep your wider goals in mind should we see further market turmoil.
Try, for a moment, to set aside the chaotic headlines. If further turmoil occurs, it’s likely we will see a repeat of the horror show finance headlines we saw back in February and March. Instead, think about the reason that you started working with us in the first place.
In those first few meetings, we didn’t talk about how to time your investments to world news or market fluctuations. Despite what many online commentators say, timing the market would be setting you up for failure. Instead, we talked about you. About the life you desire for you and your loved ones.
And finally, we discussed how our life-centered planning process can help you get that best possible life with the money you have.
3. Be flexible while keeping the right perspective on your money
Because we plan for clients’ lives, not just their money, we always take in a wide view of financial progress. Big market dips always look like a minor blip from a thirty or forty-year panoramic perspective. But “stick to your plan” doesn’t mean we don’t do anything during a major market shift.
We actually might make some pretty major changes, especially if you’re at or nearing retirement age. However, the moves we might make would be based more on your upcoming lifestyle transitions than they would on unpredictable market movements.
If we face further market turmoil, to keep yourself focused on things you can plan for, grab a sheet of paper and sit down. Divide that sheet into three sections:
Now: Financial concerns that need to be addressed as soon as possible, such as paying next month’s bills or a necessary home repair.
Soon: Important items 6-12 months out that you still have time to prepare for.
Later: Everything else.
Most of these items will already be things we’ve discussed and planned for over the course of our work together. But it’s possible that market turmoil or otherwise chaotic events will have filled up your “Nows” and bumped some of your “Soons” into “Laters”. We deliberately designed your life-centered financial plan so that it can be responsive to these changing priorities and transitions while still being sensitive to larger economic realities.
To remind yourself of what you’re truly planning for, it might be a good idea to revisit your most recent lifestyle financial plan. We’d be happy to email you a copy you can review. Or call us and we can work through this exercise together and see what adjustments we should think about.
Market turmoil might alter your path a little bit. But your long term destination should still be the same.