facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog external search brokercheck brokercheck Play Pause
What COVID-19 Has Taught Me...So Far Thumbnail

What COVID-19 Has Taught Me...So Far

Managing Your Finances

I'm not sure the COVID-19 "crisis" is unlike anything we've ever seen before. It certainly isn't the first pandemic. But, that doesn't mean it is a walk in the park. Here are a few things that I think I've learned or relearned from it.

Emergency Funds Really Are Important

It is really hard to put money into a bank account that pays "Zero Point Nada" when you could have it in the "market" making big returns (or so it seems). But when things go south in a hurry, having that money can help you sleep at night. While it isn't quite as critical for those of us with a military retirement or still serving on active duty, I think it is important. In the past I've recommended 6 -12 months of living expenses for an emergency fund. I'm thinking that more like 1 1/2 years may be a better idea. If you are retired, this would only be the amount that exceeds your monthly retired pay (after taxes) and VA Disability Compensation (if you receive it). If you're not retired military, then it would be the amount that exceeds your "guaranteed" income (like Social Security or other pensions). Once you're in your ultimate retirement, then I think you can cut it back to around 12 months (although you might also want to use a cash "bucket" in your portfolio to hedge against market risk).

Having a Plan Makes a Big Difference

This one is a "two parter". When markets go crazy, it is hard to know what to do. Having an investment plan allows you to take action based on decisions made at zero airspeed and 1 G. If the market throws significant changes at you, you move your investments to get back to plan. Without a plan, all you can do is guess (and worry) about what you should do.

Having a financial plan allows you to focus on the finish line versus the market "lurch" of the day. Being able to check things out and see how market fluctuations affect your ability to live your life the way you want to, is more beneficial than looking at those fluctuations.

You would never start a military training or combat operation without a plan. Why do it with your finances?

Sometimes Doing Nothing is Just Fine

While re-balancing a portfolio back to plan is a great thing to do, sometimes it isn't practical. Early in March the stock market was fluctuating so violently, it was virtually impossible to do the math to re-balance a portfolio. It is o.k. to let things sit for a bit, until you can actually see through the fog of volatility and make an informed decision

Roth Conversions Might Make Sense

If your income is down for any reason, this could be the year to look at Roth conversions. I would consider it if in the 22% bracket and if you're in the 12% or lower bracket, I would strongly recommend filling up those brackets with Roth conversions.

I'm Rethinking Food Security

For the least 15 years or so, I've kept about 3 days worth of canned food and water in the basement. Should get me through a hurricane aftermath. After seeing issues with the food supply chain, I might push that out a few more days or weeks. It hasn't been bad for us yet, but the shelves are a little bare. I'm not worrying too much though as there are plenty of squirrels around here and I have a pretty good recipe from my Dad for cooking them.

If you found this article useful, you mike like the following blog posts:

COVID-19: You Can Now Take $100,000 From TSP or Your IRA, but Should You?

Military Finances 201: Executing a Plan versus Reacting: Portfolio Rebalancing

Unwrapping the CARES Act

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by C.L. Sheldon & Company, LLC ), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. C.L. Sheldon & Company, LLC does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to C.L. Sheldon & Company, LLC website or incorporated herein, and C.L. Sheldon & Company, LLC takes no responsibility therefore. All such information is provided solely for convenience, educational, and informational purposes only and all users thereof should be guided accordingly. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from C.L. Sheldon & Company, LLC . To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. C.L. Sheldon & Company, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the C.L. Sheldon & Company, LLC ’s current written disclosure statement discussing our advisory services and fees is available for review upon request. DISCLAIMER OF TAX ADVICE: Any discussion contained herein cannot be considered to be tax advice. Actual tax advice would require a detailed and careful analysis of the facts and applicable law, which we expect would be time consuming and costly. We have not made and have not been asked to make that type of analysis in connection with any advice given in this blog post. As a result, we are required to advise you that any Federal tax advice rendered in this blog is not intended or written to be used and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS. In the event you would like us to perform the type of analysis that is necessary for us to provide an opinion, that does not require the above disclaimer, as always, please feel free to contact us.