In March 2017 my son and I carefully and covertly arranged a Foxtel subscription. It had to be a covert operation as my wife had for many years prevented me accessing this valuable subscription, as in her opinion it cost too much.
However, this Foxtel offer was too good to turn down as it offered all the sports channels and more for just $55 per month. What a deal!
When I pushed that final button on the application form (with my son’s expert help) we had it! It was particularly important as Australia was about to start a cricket tour of India and it was the only way I could watch.
I am a big cricket fan. I am a big AFL fan as well. In fact, I am a fan of most sporting codes. I will even watch soccer if Adelaide United are playing well.
My son recently commented that this subscription is possibly the most used television subscription in the history of television subscriptions, such has been its non-stop use.
I can watch AFL non –stop on some Saturdays from around 1pm to 10 pm. How good is that?
Fast forward three years and there is no live sport on TV. This is serious.
There are plenty of hard-working people in Australia and elsewhere in the world who rely on sporting events for a significant part of their income. I feel for them.
I also feel for the millions of hard-working Australians in small and medium business, the backbone of our great country, now out of work due to this pandemic.
Monday March 23, 2020 was a high watermark day for panic and enquiry in the financial planning industry. I haven’t experienced such a day as this but the events of the last few weeks certainly should have made me aware it was coming.
Markets continued to tumble. Safe haven asset classes such as Bonds declined in value. Flimsy Australian Equity positions collapsed. Fund managers kept churning information to keep us all informed.
Information overload is certainly a collateral impact of this war.
Not to mention the casualties – the poor people who suffer with this illness and those who pass away. Truly tragic.
It is very hard to find someone, be they family, colleague or client who hasn’t incurred some form of loss throughout the Pandemic.
What can advisers like me do in times like this?
The approach would be common among other financial advisers but my offerings have been:
- Listen and be patient. There is quite a lot of panic out there and more pain to come. It would be great to have all the answers, but trying be patient and calm (not always successful, by the way) and providing solutions is what clients want and need from me.
- Don’t panic, take a view and stick with it. Market downturns and corrections occur much more than you would think. When they do occur, the worst thing you can do is sell out to cash and wait for the market to rebound. There is plenty of evidence to suggest that this hardly ever works. Even the great Warren Buffett rarely picks the bottom of the equity cycle and I am sure I won’t be able to either. The effect of this Pandemic on businesses large and small is completely unknown mainly because no one actually can predict when the Pandemic will end. When it does, I think businesses will respond strongly to some pent-up demand. The recovery will be solid and reflect in better investment returns. For the time being, stay invested and stay true to your asset allocation strategies.
- Liquidity is important. I have business clients that have had to close. It is key to have strategies in place to ensure the family can continue to pay its bills. This may come in the form of taking advantage of Government Incentives, reviewing pension strategies or superannuation contribution strategies.
- Leave excess cash for uncertain times. If there is excess cash on hand, then leave it for uncertain times. You may need the cash for spending on essentials, not for throwing into a volatile equity market.
- Keep personal life insurances in place if you can. A reduction in cover now may be difficult to claw back when things get better again. It doesn’t seem sensible to me to reduce life insurance levels in the midst of a global pandemic. I understand that most life insurance companies will pay a benefit for an insured event if the insured gets COVID-19 – but check your policies.
- Enquire wherever you can to see if you can get a deferral of mortgage payments. You will be surprised as to what the banks will offer in these times.
- You must seek advice. Advisers will generally be red lining in times like this (not sure which ones won’t be), but still ask them for advice. They are well placed to help you out and can shed more light on your financial affairs than you often can.
I think we would all like this pandemic to move on, so we can get back to our lives.
I can get full use of my Foxtel subscription again and we can all adjust to the ‘new normal’ – whatever that looks like.
Good luck. Stay safe.
Tony Simmons leads the Private Wealth team for BDO in South Australia. He has over 30 years’ experience supporting business and personal clients to protect and grow their wealth and is a frequent contributor to specialist publications.
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.
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