Riding this Rollercoaster is not fun

Bit of a horrible disruption this virus thing isn’t it?
Who would have thought?

In my lifetime there have been plenty of disruptions. But this one has got to take the cake.

Has my life changed dramatically? Not really, I already work at home and avoid crowds. I have toilet paper from “Who Gives a Crap” and have done for years. I have a few more groceries in my cupboard, but only about a week or so worth.

I am not sick (at time of writing) and my elderly parents are (relatively) safely isolated in their home in a regional area with phone check-ins and deliveries of things they are missing out on (eggs currently) dropped at their doorstep. My (adult) kids are as safe as possible.

Having said that, it also seems as though everything has changed.

The air; whilst cleaner now, is thick with tension. The stories of hardship and loss are heartbreaking. Anxiety is hitting people it never hit before, and for those who live with it regularly, it is at a peak like Everest. The new and unknown are dominating forces.  We are missing our friends.

But familiarly we are back to the financial conversations we had during the GFC.

“This time is different”
“Why didn’t the super funds sell before the markets dropped?”
“Should I sell now to protect from further losses?”
“I can buy back in when things are looking better, right?”

And one we didn’t have during the GFC – “Should I take my $10,000 or $20,000 out of Super?”

The amount of Government Stimulus is breathtaking. Centrelink is busier than it has ever been. The options are complicated. The rules are changing. Confusion is the dominant emotion now after anxiety.

People are grateful they have jobs to go to, and jealous that others are getting a break both at the same time. People are jealous of the people with jobs, and wish they didn’t have to stay home.

Emotions are raging, and everyone is struggling.  So much uncertainty is not good for us, no wonder people are panicking.

But some things are guaranteed to happen. The health experts say that we will come to an end of this current health crisis. No-one is certain when, or exactly how, but they all agree it will end.

And financial experts are saying that the markets will recover. No one is certain when, or exactly how, but they all agree it will happen.

So, whilst this pandemic is unprecedented and horrifying, in financial terms we can look at history and see what has happened in the past:

• There are going to be some financial tragedies. We will lose company names that have been around for decades.
• We will have companies that exist now that will thrive and prosper, by offering goods and services and ways of servicing that are of most need.
• New businesses will rise to meet unforeseen opportunities and challenges.
• We will have to support people who are hit the hardest with welfare, stimulus, and a lot of understanding and care.
• The best of us will stand tall and help people out, the worst of us will scam, rob and rip people off.

Those who survive and come out the other side in the best financial positions will not just be the ones who were the richest at the start, they will be the ones who use common sense, listen to educated opinions for information, and who stay calm and in control of everything they can.

Budgets, savings, cash-flow management, research, acceptance of the situation, using any stimulus wisely, reducing expenses wherever possible, increasing income wherever possible, remembering every dollar counts, monitoring debt, and consulting experts will be paramount to moving forward after this is over.

For superannuation, getting good advice on what you should do is vital right now.

And by good advice I don’t mean agreeing with mates on social media that “it has all gone to pot and I could do it better”, then selling down and opening a Self-Managed Super Fund with a term deposit in it (“but just for now”) without understanding the complexity and costs.

I mean contacting your financial adviser or engaging with one if you don’t have one. Having sensible conversations that take your own situation into consideration. Listening to calm advice and only selling down if your assets are poor quality not because you are freaking out. Considering adding funds (if possible) while markets are low and with the best possible tax option for your situation.

Should you take out the $10,000 or $20,000?

Who knows? This is going to be a very personal decision and should only be done if really needed. But if it is really needed, then perhaps? A financial adviser can tell you, but your neighbour, social media, government and your emotions and anxiety shouldn’t.

Not everyone will qualify to withdraw. In ten years’ time it will be interesting to see people in similar positions now (e.g. super balances, jobs, family situation) who do act and those who don’t. I expect the difference will be significant.

Here is what I do know for sure:

• I was a financial adviser during the GFC. The clients who were invested appropriately and held their ground still had long-term average returns as expected and projected.
• No-one can accurately predict the top or bottom of the market, but markets will come back up at some stage. It may be sudden and dramatic.
• Everyone’s situation will be different and have different challenges, solutions and requirements.
• People with good financial advice are more financially relaxed, less likely to make poor financial choices, and have someone to call on when in doubt.
• You need to make good decisions to be one of those who can thrive after this ends.

Get the support you need in your personal life, and get the support you need in your financial world. It is vital that as soon as you can get your anxiety to a manageable level that you be sensible and deal with what is in front of you. Acknowledge that this new reality is really, really hard.

But life will go on, and this will end one day. Your actions now are vital. Contact me if you need help with the financial side.

Best of luck with your situation, and using the new sign off of our times, Stay Safe!

Melinda Houghton
Adv Dip FS (FP)
Insider Out – Understand and Trust your Advice
0400 533 865
www.insider-out./com.au
www.facebook.com/InsiderOutMel

This information may be regarded as general. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any information we have given you, having regard to your own objectives, financial situation and needs before acting on it.

I am no longer authorised to provide financial advice. If you wish to receive financial advice you must contact an authorised provider.

https://www.moneysmart.gov.au/investing/financial-advice/financial-advisers-register

2 thoughts on “Riding this Rollercoaster is not fun”

  1. All the above is correct.
    The astute “professional” stock market investor will have substantially more information than the average person and even more understanding of where and how to invest than the average “financial adviser”. Most Financial Advisers are not “smarter”, they just have more understanding of what Superannuation “products” are available. Still may not be the best professionals to be talking to during this crisis.
    As per any industry, and in fact, any group of people – there is the Bell Curve. The vast majority of Finance Advisers are are your average person making a living. Unfortunately, most of us don’t know who the really good Finance Advisers are nor how to access them.
    Maybe I’m a bit biased, but 90% of the time that I made a call or felt compelled to take action, I regretted being held back by the Banks or Government “red tape”.

    Reply
    • 100% correct Stavros, and thank you for taking the time to read the post. Insider Out has been set up as a business specifically to assist people to find good advice. By navigating, translating and reviewing advice (not providing advice) we are able to provide independent assistance and opinions for you. We can also refer to quality financial advisers if needed. You are also correct that stock brokers play a different role than financial advisers, being professional investment selectors, however they do need to be authorised to advise as well. Financial advisers are there to assist you with personal advice and decisions, legislative and taxation matters, and product selection should be the final step in the strategic process if needed as you have noted. Most financial advisers do not consider themselves “stock pickers”, they are all around advice providers who outsource specific investment selection to experts in that field. They are also not necessarily smarter, they are just experts in their field as you are in yours. They also provide protection and recourse for the advice provided via strict legislative requirements and licensing with Professional Indemnity insurance to back that up. Is legislation holding people back? Absolutely, and most advisers would agree with you on that. However to protect consumers from risk, the Government is taking steps to protect the many, which also affects the few who may not need it. Keep up the good work on educating yourself, and make sure the advice you are getting is GOOD advice.

      Reply

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