Is Your Glass Half Full or Half Empty?

We are experiencing quite a year.  A sizzling economy and a commensurate stock market set all time highs only to be waylaid by a highly infectious virus.  Enforced isolation has created an environment that is abnormal for the sociable human race.  Finally, the unfortunate death of a man held by police has led to widespread protests and riots.

It seems like the whole world is on fire.  And yet, history can help get us through this period.  Mark Twain’s supposed quote “History doesn’t repeat itself, but it often rhymes” is most appropriate at this time.  For readers of a certain age, current events are rhyming with our memories of the 1960’s, particularly 1968.

In 1968, the Tet Offensive in Vietnam became a turning point in Americans view of the war.  The incumbent President Johnson dropped from the race for another term of office.  The assassination of Martin Luther King, Jr. led to riots across the country.  With arsonists lighting fires, property damage was massive.  Racial tensions were at all time high.

Later that year, Robert Kennedy, the leading Democratic candidate for President, was also assassinated.  The disruption in the party led to yet another riot in Chicago at the Democratic National Convention.  If any year seems like it was “on fire” it was 1968.

I recount this history to make the point that things will get better.  There is no argument that we have improved on numerous fronts since that time.  We still have a ways to go, but I have no doubt that the glass is half full.   America may not get it right from the beginning, but we get it right in the end because we are a good people.

If this year has taught one thing is that everyone should have a financial plan.  A big part of that plan is an emergency fund.  This is readily available cash in case of job loss, illness, or some other dislocation.  Most experts agree that it should be the very first financial step to be put in place.

To determine the amount in your emergency fund, you need to calculate your monthly expenses and then multiply by several months.  Most planners suggest anywhere from 3 to 6 months of expenses depending on your status, i.e. single, married, family or not.

Another decision to make is where to hold this fund.  Obviously, a checking account would be readily accessible, but pay negligible interest.  A purchased money fund can improve your returns while still remaining fairly liquid.  An online high yield savings account can offer above 1%, but this will come with the downside of dealing with yet another financial institution.

There are pros and cons to all these approaches.  Using an investment advisor to help walk through the options can set you up for success.  This is especially true of an independent, fiduciary advisor.   An advisor that only recommends his firms accounts or products is not independent.

After funding your emergency fund, the next big step is to complete your financial plan.  A goal-oriented approach helps to clarify your future and allows your advisor to collaborate with you and your family on how to achieve them.   Most importantly an advisor can help point out roadblocks and weigh in on the potential for attaining your goals.

If you would like to learn how an independent, fee only advisor and a CERTIFIED FINANCIAL PLANNER™ professional can help you, please contact me.  Feel free to share with others and make suggestions for future articles: peter.oneill@fiduciamwealth.com