Investing In Yourself – Using Pillars to Build Your Core
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Setting Budgets + Saving for Black Swans
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How to Open My First Brokerage Account
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Coronavirus Update – Do You Think They Are Listening To
Your Plan?
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I’ll make 2 quick assessments. I’m of the belief that we are moving too
slow and in a fragmented manner. Tone at the top, is when the highest leader
of an organization sets the direction and PLAN which gives everyone
instructions on what to do. Assessment 1 -The
tone from our leaders has been slow --- despite the rumors people are
spreading--- there is no “National Holiday” that has been declared. Something
like this would have to come from our President and federal government. So what does that mean, you need to be
listening and looking to your local city and state leadership for direction
because each and every city will deliver their own instructions. This is fragmented and leads me
to believe that the handling of this outbreak will take longer than may be
needed. We’ve gone from different messages:
a) go about your daily lives, b) social distances, to c) hunker down?? Very early on you saw that I’ve called for
a national holiday. This approach goes further than social distancing because
it tells everyone to stay home but reassures the masses that they can pay
bills if they cannot work from home. You identify the sick, give them help
outside of our fragile hospital system, don’t expose others, and try to
assist the stores and restaurants with supply chain and safety measures for
shoppers. For example, set limits against hoarding and push people to order
ahead and people of means can continue ordering from restaurants thru
delivery if done safely. Assessment 2 - I called for testing --- this reduces the panic in the air.
The truth is if you show any symptoms of any type of sickness you need to
isolate yourself, remember there is no cure. But testing helps to comfort
us and know what we are dealing with. Thanks to companies like Roche
Diagnostics stepping up, they are producing over 400K testing kits each week
to now assist the country. The elderly
and vulnerable need to seek help first and if you think your symptoms are
progressing then you should seek assistance.
So currently, I know some
people are still physically going to work and I can attest not everyone is an
essential employee. I know some schools are still open. This uncoordinated
approach IMO delays stopping the spread.
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What Comes Next?
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Well let’s think about what I’ve
laid out above. A fragmented approach
is leading to companies and schools closing on their own terms. By not doing
it in coordination you will now have a fragmented and unclear approach to
layoffs, furloughs, and how employees get paid. Even if you can work from
home, what decisions will your company take if their sales/productions/revenues
dip? Remember this is NOT just in
America but across the world. So
my math leads me to believe that things will get worse before they get better
and yes that means Recession signals.
I’m mentally planning for a Recession and making minor
adjustments.
1st Budget and Save à If the government does NOT help out you and
me (main street) you need to build and rely on your saving to ride through
the rough patch.
2nd Renegotiate Bills à Call everyone but the
Water/Sewer, Gas, Electric Cos. If you
pay for cable, internet, cell phone, and mortgages now is the time to
determine if you need that service and IF they value your business. For
example, sorry Sports Fans – if all sports is canceled do you really need the
Sports Cable Package??
3rd Refinance à Because of poor leadership,
the markets are panicked. For
example, you’re not crazy if you got a response from a bank last week quoting
you pretty bad rates. I learned that the market which buys mortgage products seized
up. Good news is call back, the Federal Reserve last night indicated they
will directly begin buying mortgage products so RATES SHOULD START going back
down. Don’t settle
Me personally, I can’t watch
the NBA, English Premier League, or March Madness right now so it’s time for
cable to go. My refinance is in progress and I’ll keep you posted on my
savings.
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What About My Retirement?
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Once you have your budget
in-line, the savings will slowly start to roll in. Then it’s time to think
about your individual retirement account (IRA). I don’t like to advise people
on what to buy and do because we all think differently. If you read what I
posted above, my thesis is the actions NOT being taken by our leadership will
prolong this crisis. If my thesis is correct, the market will fall further
and we may technically reach recessionary levels. The reason I like to invest is you can tell
the real from the fake. Many people like to give you their opinion, but would
they place their own $$ on what they are telling you. To mess with people, I
often ask them would they be willing to bet on it…and that’s when they get
quiet. If you have done the work, the rest is to follow your instinct. I have a savings account that allows me
ride this store out no matter what happens. That allows my IRA to truly be
just that…a retirement accounts. So for my real ballers, think
about this concept. If you believe the markets are NOT going to do well for
awhile --- why stick around. I call it my Sandlot Move à I take my ball and leave, like Jay
Z said “I don’t need the NFL, the NFL needs me”. If you don’t know what he’s talking about
here --- keep working on the pillars we lay out here and you soon will. I make
moves when I say so and in this environment, I don’t need to put my
retirement account at risk because some guy in an ivory tower tells me wait
it out. So what if I miss some of the rebound, I’m still good. I’ll catch the
markets when I can go to an NBA game again --- or maybe an NFL game Jay J
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Urb Lesson of the Day – Individual Retirement Accounts (IRA) are not
something to be taken lightly. First diversify your IRA. My buddy told me
something that I thought was no longer widely practiced after the days of Worldcom
and Enron going out of business. He mentioned he had most or all of his 401K
retirement account in his company stock.
It’s great to be a believer in your company but you must be
diversified. Before Enron: Many
companies matched 401K funds in Company stock. Employees were often
required to hold the stock until retirement or closure of the account. That
IS NO LONGER THE CASE. You're more than welcome in leaving in all company stock but know you are gambling and not investing. You could win BIG or go BUST. My advice is
even if you work at Apple, ensure that your entire 401K is not in company
stock AND if your match is in company stock --- elect to have it go cash
(Stable Value Fund) or something like the S&P 500. Then later when you
evaluate your account (each month or quarter) you can CHOOSE to have some of
it going to company stock. Never let someone choose for you. Boss move
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