E231- COVID19 And Your Money

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Introduction

Denis O’Brien [0:37]
Welcome to Episode 231 COVID19 and your Money. Hey money clan, a warm welcome to the Chain of Wealth podcast. I’m your host, Denis O’Brien.

Katie Welsh [0:50]
And I’m Katie Welsh.

Denis O’Brien [1:20]
So Katie, quite a hectic episode that we’re in full today. And in a bit of the response to the COVID19 pandemic that we’ve all been facing.

Katie Welsh [1:1]
Yes because we have all been hearing about this constantly. That is all anybody talks about. But what I haven’t heard a lot of people talking about is their money and moreso how to handle money, not the lack of money that they are now experiencing.

Denis O’Brien [1:20]
Right, exactly. And we’re gonna dive into all of that in today’s show. If you guys haven’t already, join us on Facebook hit us up. It’s chainofwealth.com/group and tell us what you’re currently working on in your money life. Alright Kate you ready to dive on in.

Katie Welsh [1:38]
Yes.

Denis O’Brien [1:38]
Fantastic. Let’s do it.

The Episode

Denis O’Brien [1:52]
Alright Kate so diving right in and chatting about the Corona virus, COVID19 headlines all over the world, basically, everyone is affected. I don’t care what country you are in, how many people live there. This is definitely on your radar. And you know, it really started off as like this tiny little blip. You know, everyone was kind of like, Oh, well, there’s this thing in China. It’s the small little outbreak and

Katie Welsh [2:17]
Not really our problem. Chinese are so far away.

Denis O’Brien [2:20]
And now we kind of look at it. And it’s in the in the US and, you know, like the most cases reported yesterday, globally were in the US. And I’m not saying total cases. I’m just saying growth in cases. But I mean, it’s sort of points towards that. It’s going to be rampant in the United States and across the world, for that matter.

Katie Welsh [2:40]
No, it’s definitely an alarming time for everybody. And I think now people are really starting to be cognizant of how many things you touch during the day, compared to how little you probably used to wash your hands.

Denis O’Brien [2:59]
Yeah Kate and I mean, just like a small little thing. You know, like when you are out in a store and you go and you try and check out, yes, how many people touch that little keypad in a day.

Katie Welsh [3:9]
Or that little self scanning gunny thing? Yeah, I thought about that. Yeah, it’s

Denis O’Brien [3:15]
It’s actually crazy. Gas Pump. Yeah. And you literally just can’t get out of it. You know, it’s the nature of the society that we live in that there’s just people everywhere. And everyone’s just, you know, involved in everyone’s business. And that just is what it is. But anyway, that’s not the focus of today’s show. Today, we’re going to be chatting into the money aspect of COVID19. And I wanted to really dive into the market and what has been happening in this sort of turmoil we’ve seen, you know like circuit breaker after circuit breaker hit in the stock markets and in a really unprecedented decline that looks somewhat scary and familiar to most of the other major crashes that we’ve seen.

Katie Welsh [3:57]
Yeah it is every time I look at my phone, I have the Robin Hood app on my phone. And I will just see my phone like do a little vibrate and a light up and first I used to think like wow, I have gotten so popular. And now I just have realized it is the constant Robinhood notifications and when I check it, It’s just like everything is down.

Denis O’Brien [4:22]
Yeah and Kate, I think that you know that this just initially like it goes back to what we said you know, where one of the most important things you can do is diversify. And you know, if you are very heavy in stocks, you’ve obviously been hit pretty hard, but maybe just a lesson for future. You know, you maybe want to be a lil more diversified. And yes, you may give up some of the gains that you could potentially get, because a lot of people flocked to the stock market because they think it’s, quote unquote, easy money. But, you know, like long term, you should average that 8%. But there are times where you’re going to be down 40% in a year. And I mean, just looking at the first couple months here in 2020, we’ve seen, you know, just exactly that, like the whole market has taken such downturn. And basically, a lot of the gains that have been given under the current administration are all gone, you know, and it’s a very trying time, especially, you know, for people that are sort of nearing retirement age, you know, they sort of think they’ve got this nice nest egg saved up or people that have just recently retired. Imagine if you were like, Oh, well, a million dollars is enough money for me to retire off. Suddenly, you have like, 600,000 you’ve just lost like almost half your money. You know, like, what kind of a bow to you and then like what’s going through your mind to that point.

Katie Welsh [5:38]
So for people who are will just talk to people who are our general age and our general position Den where we’re early 30s. Not I don’t want to say just starting out, but really starting to like embrace adulthood, right? Like, we’re not going out partying all the time. I guess nobody’s going out partying all the time anymore. We weren’t before. And we’re kind of looking forward to the future and everything in terms of the stock market, because real estate can, you know, it can take a little bit of time to save up to be able to get into that game. So the stock market is nice, because, oh, I have $100 here. Let me invest in whatever, right. For those people who have a majority of their money in their stock market, what do you have to say to them right now?

Denis O’Brien [6:36]
Yeah, I mean, like, a lot of people would sort of jump into the whole I should sell now and get what money I have in the market out because the entire thing is going to crash and go to zero.

Katie Welsh [6:46]
And that’s a fair thought.

Denis O’Brien [6:48]
Well, I mean, it’s a fair thoughts, having, you know, witnessed the last couple weeks and sort of seeing what the markets have done and just the sheer turmoil that, you know, has sort of gone on, but Kate looking a little bit deeper than that. You know, the thing is, markets do have corrections. And, you know, a lot of people would say that this has been a long time coming. And, you know, we’ve had a massive bull run over basically since 2008, which is exceptionally long and unprecedented really that for it to last quite this long. And not to say that this is just going to be, you know, bad times going forward or anything else like that, or a massive recession. And who knows it very well might be a major recession that we’re in for, but realistically, you need to be looking long term, you need to be saying, Okay, well, where do I want to get to? Maybe it’s a good time to reallocate your portfolio if you are inclined to do so. But I think the last thing that I would really think about is just saying, Oh, well, you should just liquidate everything and you know, just put your money in cash and have it under your pillow and hope it’s going to grow big because it’s not. You know, at the end of the day, you have to have some appetite for risk, and you have to have some safeguards in place to prevent yourself from losing money. And, you know, in times like this, even just the market itself, it’s a great time to sort of look to those safer stocks. So, you know, starting to maybe look to buy utility stocks, you know, power companies, water companies, stuff that sort of is bare basic essentials, you know, looking at some of the retailers that are more sort of cheaper, like maybe like a Dollar Tree or Dollar General or something like that, you know, that like they’re typically safer stocks at that at this point in time. Because, you know, just because people are going to be a bit more stressed for money and not worry, and they’re going to be worried but more and maybe think about think twice about spending money, stuff like essential stuff like utilities, they’re going to have to do it anyway. There’s no way out of it. You’re still going to be living in your house. You’re still going to be using that electricity that’s cellphone, still have to take a shower, still take a shower, all those sort of like bigger services, those are definitely something that I would start looking into and being like, hey, do I maybe want to own some of these if there are rough times coming, and maybe shy away from some of the more elaborate, I wouldn’t even say elaborate, but sort of more luxury goods and nature, okay. And you’d kind of see that those stocks sort of do tail off in recessions. Not to say that they’re bad buys, and they’re not going to give a return. It’s just like, you have to sort of stop thinking strategically about what people are going to be looking at. And yeah, it definitely is a massive change in the mindset, thing that people need to start thinking about.

Katie Welsh [9:26]
That your advice matches exactly. All of the big financial bloggers that I have been reading their articles and everything because you know all on my Twitter now is you know what to do with the corona virus, your money in the corona virus and all this and the number one thing that I’ve seen across the board with all the big bloggers is saying, don’t panic when you panic, that’s when you make those rash decisions and you in times like this is you don’t want to make those rash decisions. Keep what you have. And eventually, like you say, the market will come back. So especially if you have time on your side not to go and just liquidate everything and keep it in your pillowcase.

Denis O’Brien [10:17]
Yeah, 100%. Real quick. Let’s just take a very quick break and say a very big thanks to our sponsor.

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Denis O’Brien [11:16]
All right, Kate. So coming back from the break. So, you know, I know we spoke a little bit about you know, not to panic and not to make rash decisions. But you know, it’s not easy really, you know, like you’re you’re sitting there you’re looking at these triggers being placed in the market and you know just such flux.

Katie Welsh [11:33]
You mean cliffs?

Denis O’Brien [11:35]
Well, I mean, yeah, yeah, cliffs, but uh, you know, the safety precautions that the market puts in place and trading suspended for 15 minutes. And this happens day after day after day. And really you see, like, stocks that were trading really well, like, we look at sort of like Carnival, you know, like the major cruise liner, they’ve lost a significant portion of the value in a matter of like two months. And, you know, like, maybe if you think that if people are not going to be at, you know, stocks like that, like, maybe we mentioned Disney as well, like they have a large portion of their revenue that comes from theme parks. You know, if people are not going to a theme parks, that’s going to be a massive blow to their revenue. So thinking about stuff like that and thinking about, oh, well, is this maybe an opportunity for me to short these stocks and maybe take a little bit of a precaution and that if something does go wrong, you maybe have some sort of safeguard in place like, you know, it is something you want to sort of think about and decide what you want to do. But I would say, you know, if you’re sticking to index funds and such things, you’re probably going to be safe either way, and you may have lost a bit of money. But just remember it’s long term. And right now is a good time to probably be buying. Because everything that you had bought previously is now at a sale, you know, it’s

Katie Welsh [12:55]
It’s like buy one, get 13 free.

Denis O’Brien [12:59]
Exactly. It’s like, you rock up on Black Friday, and everything’s like 70% off and you say, Well, why wouldn’t I buy?

Katie Welsh [13:5]
Right? Yeah, no, that’s definitely that’s the mindset to have. And I always think of that quote, and I want to say it’s from Warren Buffett, that, you know, when people are greedy, you need to be scared. And when people are scared, that’s when you need to be greedy.

Denis O’Brien [13:20]
Yeah, that’s exactly it.

Katie Welsh [13:22]
When you think about it. It’s totally true, because for a while everybody is getting really greedy. And you know, everybody was talking about how much money they’re making. And now look at what has happened. And I also want to pivot a little bit away from investing in stock markets Den and talk about the importance of an emergency fund now because I think now, you know, so many people are in the service industry and so many people have had their wages, you know, possibly even 100% cut or slashed in half or, you know, people are going to start really having to fall back on their emergency fund. And we’ve talked before that most Americans don’t have a 500 or 1,000 dollars saved.

Denis O’Brien [14:8]
1000 dollars, yeah.

Katie Welsh [14:9]
Not even $1,000 and in most places that won’t even get you through a month. No, right now is really that time to if you have saved up a healthy little emergency fund, really pat yourself on the back because I think there are a lot of people who are probably quite stressed.

Denis O’Brien [14:27]
100% Kate and you know, I think like like we’ve always said building that emergency fund is such a critical building block of what you should be basing your finances. And you know, it pads you in situations where stuff like this happens, you know. And in a worst case scenario like if you were to get let go from your job, you have some sort of a pillar to fall back on, you’re not going to be stressed and you’re not going to go deep on your credit card and have to struggle to pay that off in the future.

Katie Welsh [14:57]
Right? Well not even let go from your job. But if you’re working in a restaurant and your restaurant has been close, or your hours are super cut, you’re not going to be making that same income. And I think we can all probably agree that a worldwide pandemic can classify as a I was looking for a word there and it never came. But it is okay to dip into your emergency fund when there’s a worldwide pandemic, especially for necessities like food and keeping your power on and things like that.

Denis O’Brien [15:30]
Yeah, I totally agree and you know, at the end of the day, you want to sort of make sure you have all the essentials? And guys toilet paper is not necessarily an essential. Well it isn’t it isn’t right.

Katie Welsh [15:39]
Toilet paper work around it.

Denis O’Brien [15:42]
I mean, some people could say that toilet paper is a commodity now. Like there’s probably a whole like, you know, a futures market just on toilet paper. And people like betting different brands.

Katie Welsh [15:53]
two ply. But Sharman.

Denis O’Brien [15:56]
Yeah. So, I mean, like, to be fair, you know, it’s a case of just focus on the essentials, make sure you have everything you need, and don’t go and like just load up on everything, you know, like, going out and buying two years worth of toilet paper is probably a little bit excessive, you know, as a, save some spots for everyone else and let everyone buy in. You know, panic buying is really what causes like shortages. If everyone just stuck to the regular consumption levels, there wouldn’t be a problem. But people try to, you know, get smart and trick the system and unfortunately, it doesn’t work out that way. And all it ends up doing is you end messing up other people that probably need it more than you do. The year and six months worth of supplies that you have, someone else could be looking, you know,

Katie Welsh [18:15]
For the next week or so.

Denis O’Brien [16:43]
For the next week, and they’re in a much more dire straight position. And you’ve you almost forced them to start suffering now because of your actions. Yes, I mean, there’s no consequences. But, you know, at the end of the day, when it comes to a worldwide pandemic, you know, you really have to be, you know, just mindful of everything going on around you realize that, you know, well, I wouldn’t say realize, what I’m going to say is think about how long it’s gonna last, you know, like, is this a long term thing? And how should you react accordingly. And if it is a long term thing, you need to sort of try and prepare yourself in a way that you can live in such a scenario. And you know, whether that’s, you know, you’ll start wearing gloves everywhere you go or whatever it is, because you can’t stay home all the time as well. You know,

Denis O’Brien [17:7]
If you can find gloves to wear everywhere, tell us where they are because we have not been able to find any.

Denis O’Brien [17:36]
Yeah, but I mean, you know, at the end of the day, you just gotta, you know, be responsible that and a lot of people are being forced to work from home with this whole thing and, you know, it’s, it’s like myself included as well I don’t normally work from home and I’ve been told stay home basically through the end of April. You know, it’s definitely a different experience for a lot of people. And I think you know, this is really just gonna take the whole world coming together and trying to play ball together to actually curb the virus and try and slow the growth and really get ahead of it while you know everyone sort of the hub while the health care system tries to deal with and tries to create a

Katie Welsh [18:14]
Cure?

Denis O’Brien [18:15]
Well, yeah, cure or a stop. I mean, it’s.

Katie Welsh [18:21]
Well, I think that that is a good time where we can just say goodbye to everybody. There’s a happy and healthy and wash your hands every time you think about it.

Denis O’Brien [18:33]
Yeah, totally agree. So, everyone, like stay safe out there, you know, be responsible and practice social distancing. And, you know, just maybe enjoy some time at home with your family. Yeah. Catch you guys next time on another episode of Chain of Wealth.

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The Chain of Wealth podcast is a biweekly podcast boasting over 500,000 downloads. We interview inspirational guests about money topics. You can learn more about us here.

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