It’s a good idea to look out beyond the hour, day and week. Some people plan important events years in advance. When you plan ahead, it changes your perspective on life, time and prioritisation.
Our life insurance broker rang me today. He wanted to check that I was happy with the cover we had. Was it the right amount, coverage and term (length of time)? All seemed fine.
However, it did get us running a few scenarios. How old would we be in 10, 20 and 30 years? We also needed to calculate how old the kids would be on those dates. The other point to consider was specific life moments falling in those time periods. Big events we considered were; helping with the children’s university costs, business start up costs and/or potential wedding costs.
Planning ahead does make you confront some brutal truths. In particular, it reminds you that you will either be much older one day, or the alternative. And you should consider that ‘much older’ comes with more than simply more candles on your birthday cake. Your health and wellness is likely to change somewhat.
You plan ahead for things that you want such as holidays, concerts and sporting events. So you should also plan ahead for those events that are inevitable, like ageing and the alternative.
It has a nice ring to it, doesn’t it? Most people would be pretty pleased with that sum of money. Winning £1 million seems to be the magic number for a lot of people.
Songs have been written about having a million dollars. People talk about how life would be different if they could just, ‘win a million’. And many people have dreamt about what they would do if they had a million dollars, pounds or euros show up in their life unexpectedly.
Although today £1 million wouldn’t put you in the exclusive group it would have in 1970, it is still an exciting amount of money to most people. Even for someone who has a net worth of £30 million (i.e. assets less liabilities), this amount would probably be warmly received. This is in part because those assets might produce £3 million in income. So an extra 33% more would likely be welcome.
What would you do if you had £1 million turn up in your bank account? Whether it was from an inheritance (long lost Auntie?), a lottery ticket or some fascinating philanthropist doing things differently.
Wouldn’t winning £1 million be an exciting thing? Would you do something exciting and novel? Or something sensible and pragmatic? Perhaps you would do a little of both.
If you have been trying to change something in your life, without success, check your perceptions. The ‘becoming one of them’ way of thinking might be holding you back.
We all have certain perceptions, stereotypes or biases about things and people. Some of these are very mild and some awaken deep feelings in us.
Some examples where perceptions can be stronger could be; how you see parenthood, a university degree, body weight, a political party, wealth or being organised.
These examples, or others, may not elicit any strong emotion in you. Though some people will have a noticeable level of tension around a few of these subjects.
This tension is good to be aware of and explore. It often comes out in the language used when discussing the topic. Some common phrases are; the wealthy are greedy or being organised is boring.
I’ve been researching and thinking a lot about this movement between tribes and the challenges people encounter. After discussing it with a friend on our run this morning, I heard this episode (#950) of the Quote Of The Day show. It’s a great podcast and this episode was timely.
Although Lisa Jimenez is talking about millionaires, I believe that the ‘becoming one of them‘ thinking applies to most changes a person would like to make.
Remember, say good things about the tribe you’re trying to become a part of. When you don’t, your mind won’t let you join them and have their benefits.
What does freedom mean to you? Is it about going where you like, saying things you think, not having to work or having any dependents? The freedom factor determines a lot about your life.
For many people, they can go where they like. In addition, within a very wide spectrum, they can say what they think. In many developed countries, you can already choose not to work and survive with social assistance programs. Finally, you can choose not to have a partner or children or pets that depend on you. That’s usually in your control.
So, a great many people already have freedom. Sometimes we don’t realise how fortunate we are. Because there are still quite a few people, and places, that don’t have these basic freedoms, which many people take for granted. And it wasn’t that long ago you could have lost your head for being in the wrong spot, saying the wrong thing or not paying bills.
Which leads us on to financial freedom. This is the freedom that allows us to choose those things we want to do, when we want to do them. For many this equates to retirement.
But if you love what you do, you may never ‘retire’.
Wealth. It is frequently fancied while sometimes sneered at. How do you keep it in the family? Shirtsleeves to shirtsleeves in three generations is a well known, international sentiment, with this in mind.
Historically, the first generation works hard, makes sacrifices, and ensures that the money comes in. In addition, they use it well. Because of this, the first generation can grow their wealth. Often this requires practicality and frugalness. While displaying these values, their children learn more about the ingredients to success and wealth.
Parents will sacrifice their pleasure to provide a better life for their children. During this period, the children see their parent’s effort and sacrifice. Because of this, they often choose or are directed toward more stable and higher income roles. Without having to toil and sacrifice as much as their parents, who shielded them from it, they develop more of a lifestyle led existence.
The parents often sow the seed of the family’s demise. They do not always train their children in hard work, sacrifice, sensible spending and intelligent, long term investing. Certainly the second generation seldom pass key life lessons on to their children.
The third generation, brought up with wealth and a nicer lifestyle, often have few of the key ingredients to maintain or build on the family wealth. Therefore, many times this third generation reduces the family wealth. This may be through poor investing, frivolous spending, family legal disputes or trying to live up to the family name.
You can prevent shirtsleeves to shirtsleeves in three generations. Be sure to instil in your children, and grandchildren, the concepts of hard work, sacrifice and developing an investor‘s mindset.
Coronavirus Exit Strategy: Use empty hotels to develop Herd Immunity
Stopping this market meltdown, and the fast growing financial and social challenges, requires two things:
1. Making livelihoods our absolute focus (while still saving lives impacted by Coronavirus and managing hospital beds) and
2. Providing a clearly defined end date to this situation. This can be done by immediately starting to develop herd immunity by creating a Government Organised Voluntary Infection (GOVI) programme, for healthy people, in all the UK’s empty hotels
The Problem:
The market, and people generally, require certainty so they can move forward confidently. Currently there is no certainty when considering the end to this pandemic*. Hoping for a viable vaccine provides no certainty. It is like hoping to win the lottery: It’s worth trying, but don’t count on it as your only strategy.
The Solution:
We need a clear, time-bound exit strategy that can show progress is happening and has a clearly defined end date. A GOVI programme would do both.
GOVI explained:
While people are self-isolating in this Suppression Phase, we can roll out a government organised voluntary infection (GOVI) programme at designated hotels (all UK hotels). The GOVI programme would be similar to the idea of chicken pox parties, where healthy children would get together with an infected child and get infected to be done with it. If 50%-80% of the healthy 6-60 population are going to get the Coronavirus at some time anyway, with mostly mild symptoms, why not get it over with?
For WWII, people volunteered to fight in the war effort knowing that there was a significant risk of death or serious injury. These recruits were checked for being in good health (i.e. no underlying conditions) and then sent off to battle the enemy. With more than 700,000 (mostly empty) hotel rooms in the UK alone, the government could pay hotels to host people who are 20-50 years old, and with no underlying conditions, who volunteer to contract the virus under supervision. They would get checked out by a GP, and if ok, they would go to a government designated hotel where they would contract the virus and stay in the hotel for 7-10 days, until ‘immune’. The volunteers are then checked/tested by a doctor before leaving the hotel to confirm their immunity. Once immune, the volunteer gets a document and badge noting that they can re-enter society.
The government would need to authorise and organise this phase to maintain a controlled spread of the virus. They would need to set out the plan of action, acknowledge the challenges and risks involved and call out for suitable volunteers.
GOVI benefits :
In theory we could have c.700,000 very low risk people gaining immunity every 10 days. Over the next 12 weeks (84 days), we could have roughly 5 million people gaining immunity. This could be happening while the 70+ group and the Underlying Condition (UC) group are protected through self-isolation. Additionally, we could continue to have strong social distancing/lockdown policies in place (Suppression Phase), continue testing and encourage scientists to search for and progress a possible vaccine: all concurrently.
It’s more Churchill D-Day then Chamberlain “Peace for our time”. Let’s take the battle to the enemy rather than try to avoid the inevitable. Advance on the enemy rather than simply shield the citizens from harm.
A war time army of volunteers is required and I believe many would be willing to do this. Since there seems to be an overwhelmingly high recovery rate for healthy people aged 18-50 (99.7%), let’s get it and get on with it.
The ever-growing Immune Army can then help high risk people, relieve care workers, support hospital workers and others, or just get back to work. Ever more volunteers will spend a week in the designated hotels until huge swathes of the population are immune.
Within one year, about half of the young and healthy population (25 million people) in the UK will be immune, without having overrun the NHS. In 2 years, most under 70’s and those without known underlying conditions would have immunity (c.55 million). After communicating this plan, normalcy will start to return in weeks to months, demand will return, markets will stop the slide and maybe reverse, and the world can start to mend.
Summary:
Without creating certainty with a credible exit strategy, the markets will continue in meltdown, workers will be laid off, industries will collapse, and the government will have to finance the entire economy, possibly for years. Adding a GOVI programme in parallel to the other strategies/phases being employed, could greatly improve our chances of saving the most lives, from all causes. In addition, the GOVI programme will also put a floor in the economy with a certain and time-bound exit strategy, which will stop the markets sliding. Finally, this additional strategy could save billions of people from suffering through the severe, drawn out, Depression era future that the trends seem to indicate we are heading for.
Link to Mervyn King on CNBC, on Monday, referring to no viable exit strategy, from minute 8:45 to 9:20 (so 35 seconds long).
* Link to Mervyn King on CNBC, on Monday, referring to no viable exit strategy, from minute 8:45 to 9:20 (so 35 seconds long).
FIND MORE DETAIL:
I have added several follow up thoughts for you on my blog website page called Coronavirus Exit Strategy: GOVI. Points covered consider the next 2-3 years and our options. I’ve also added some sources and supporting detail,
Do we allow up to 264 million people to die worldwide while trying to maintain livelihoods globally or do we attempt to save those people, while corporate, government and personal finances, and therefore all livelihoods, are shredded beyond recognition?
Save lives or save livelihoods? That is the big picture, tough decision that Governments, and their citizens, need to consider, and fairly quickly.
I outlined some of the key considerations in my post the other day which you can access by clicking here.
Most people will have an automatic gut reaction to what is the ‘right’ answer. Try putting that reaction on pause, gather some info, and really think through the next year of unintended consequences. Think like a President or Prime Minister who has to consider millions of others in all their different circumstances.
7.8 billion people infected. 264 million COVID-19 related deaths globally. Of which, 80% were over 60 years old with more than 75% of those having an underlying health issue.
These numbers represent the end game – the potential worst case scenario, at current trends, given the World Health Organisation mortality rate, if every person on the planet where to be infected.
Should the media and its readers really be counting up by ones and tens for each new country, each new city with a confirmed case and each new death? The sooner we can accept that this has the potential to create extremely difficult times, the sooner we can move on and keep what is good, still going.
By that I mean that if we do have the tragic human toll either way (sooner or later), let’s not have a disastrous financial toll too. This is because the financial toll could lead to all sorts of other challenges and human suffering as companies go bust, people lose their jobs and incomes, and then payments for cars, houses, rent, food, medicines etc aren’t made. Then we would have a very harsh economic challenge as well as rising mortality numbers.
In my thoughts, there are three ‘Best case’ outcomes:
Find a cure in March or April 2020: Then all is good. (If not, economic challenges will become severe and worsening)
We quarantine it out of existence such that not one single person has it and then we go back to normal (This could be several months, or more, as we don’t know exactly who has it and there is a carrier lag due to a 14 day incubation period)
We accept it is happening and carry on as normal while changing some habits (no handshakes, wash hands frequently, minimise contact with others while we carry on as normal). We would continue to fly, meet, attend sporting events and conferences etc., while being more cautious, especially around older people.
A fiscal stimulus will not solve this alone. If people are staying home from work and social events – out of concern or government mandates, and they are not producing or consuming as much as before – for the same reasons, then economies will quickly start to falter as airlines, hotels, university sandwich shops, retailers and banks fail, one at a time, in ever rapid succession.
Perhaps we should be carrying on while accepting that there will be significant deaths. If we don’t, and if we don’t find a cure or quarantine it out of existence, the descent into exceptionally hard economic times could be imminent. This could come with severe societal shocks due to high levels of insolvencies and unemployment, a credit freeze and growing crime and unrest.
In addition, there is no amount of stockpiling you can do that will get you through to the end of this, either: unless a cure is found in March, latest April. If supply chains slow down, the real impact will be many months away, not weeks.
This may become our generational thing to get through like all those who had to endure WWI, The Spanish Flu, The Great Depression, WWII and/or the Cold War. Except for the destruction of the wars, this might be all those wrapped up in one. Or not. No one knows how exactly this will all play out.
No one wants to be the person or family infected. But then no one wants to be hit by a car, be told they have cancer or have a heart attack. These are all random events that can impact us or our families and friends at any time. Yet we still go about our days: despite knowing any number of things could send us off to meet our maker. We simply take precautions. We look before crossing the street and eat healthy and exercise. Now we’ll wash our hands more too.
Yes, it’s a little more scary than the other main ways to pass, mainly because it’s new and there is uncertainty.
However, we need to keep calm and carry on. Otherwise, we could make matters far worse.
Accept the end game as a worst case, wash your hands well and frequently, tell important people what you should (sooner rather than later), eat well and exercise so your body is at its best – in case you need to do battle with this virus (or any other life, or lifestyle, threatening situation).
Hopefully the incredibly clever people around the world will discover a cure in the weeks to come. Hopefully it is quarantined out of existence. Hopefully everyone develops an immunity to it.
Regardless, the end game is that 7.55 billion people should survive this flu virus. Odds are you’ll be fine. Most families, however, will be impacted in some way. Be empathetic. Be kind. Be generous where you can.
Have you ever played a game with your friends, where you discuss how much money you would need to retire? What size of pot would you have to have accumulated?
I remember one time playing this game about 15 years ago, and a friend decided that he would need £15 million. With this you could buy a fine home, some nice cars and a place in the country for weekend getaways. With the remaining £8 million, you could invest it for some cashflow to pay for the food, financing, and fun. Invested at 5%, you could gross £400,000 per year. This would make most people pleased.
Strangely, that little bit of friendly, whistful thinking was what many people would call their estate, or retirement, planning.
The one significant challenge most people found in this friendly game, was that it would take the majority of people far to many long years of work to amass that level of savings in a pot.
So maybe look at it another way. What level of cashflow could you live on and be happy? £1,000 per month? £8,000? £27,000? £376,000 per month? £3 million per month or more? It may be easier for many people to find a lower level of cashflow income, of several thousand pounds per month, coming from some investments (Dividend stocks, bonds, property, royalties, etc), than to work, save and build a large pot.
Could you do a side hustle, online perhaps, that, over the next three years, you could build up from £100 cashflowing income per month to say £5,000? If that money could be generated by a more passive income, imagine your free time too.
So how much would you need to earn, as a bare minimum, on a monthly basis? How could you start trying to make this extra income? Think about it. Do some research. Change your life!
It is fascinating to observe how differently people engage with the topic of money. As with most things, it is a learned behaviour, usually from parents, extended family, family friends and primary school.
As with other habits and patterns of thinking, a person, with a little curiosity, an open mind and a growth mindset, can change their views and relationship with money to improve all things money related in their life.
They will, of course, have to do their own pushups on this one. Though there are loads of useful resources to help with a money mindset transformation. T Harv Eker and Jen Sincero have good and enjoyable books on the topic to get people started.
My challenge to you today is to think about your money mantras for a few minutes. Figure out your earliest memory of those mantras, as well as who said them or reinforced them, and then consider how they might just be impacting your life. Hint: It may not be in a good way.
Here are a few common phrases to get you started:
Money is bad (it is not good or bad, it’s just a thing),
Money is the root of all evil (Is it? Or is it just a medium of exchange? Is your paycheck evil? Besides, the phrase is often misquoted from 1Timothy 6:10 For the love of money is the root of all kinds of evil. – Here it seems to be referring to greed or avarice – one of the seven deadly sins – whereby greed is an intense and selfish desire.
We can’t afford it (Try asking, ‘How could we afford it, or something similar?’ – It’s much more empowering)
Rich people are jerks (or crooks). (Now some may be, and some won’t be. There’s no point being richist. Is your commentary based on a sample size of one? Are you just parroting what the journalist/paper wants you to think?
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