CategoriesActionFinancialObserveReframe your thoughtsThink About It

Coronavirus End Game

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:

  1. Find a cure in March or April 2020: Then all is good. (If not, economic challenges will become severe and worsening)
  2. 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)
  3. 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.

Just keep calm and carry on.

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CategoriesActionFinancialPropertyReframe your thoughts

What’s Your Number? Flow Versus Pot.

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!

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CategoriesFinancialObserveReframe your thoughts

Money Mindset

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:

  1. Money is bad (it is not good or bad, it’s just a thing),
  2. 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.
  3. We can’t afford it (Try asking, ‘How could we afford it, or something similar?’ – It’s much more empowering)
  4. 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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CategoriesFinancialThink About It

Investment Returns v Time

I find it fascinating that there are so many different ways to calculate financial returns. Some people look at returns differently.

From gross yield to infinite returns, IRR, ROCE, ROE, ROI etc.

ROI, or Return On Investment, comes up often, especially in property conversations, which is something we spend a fair bit of time having.

But very few people discuss ROTI, or Return On Time Invested.

You might consider time when you start a new job and wonder, is this worth my time. Your salary and benefits would be your return on your time invested at a job. Though, if you were told the job would be 35 hours a week and you regularly work 70 hours, your ROTI would be half what you thought it would be.

If you are an entrepreneur, your ROTI can be a little discouraging in the first couple of years as you might work very long hours while planting the seeds for your business, and not getting much back in return.

As you don’t know how much time you’ll have in this life, before it’s all over, and you can’t get any more of it, you are best to allocate or spend every minute wisely.

By the way, your returns don’t have to be measured strictly in financial terms when measuring ROTI. The returns you get might be the joy of spending great moments with your family, spouse, kids, parents, friends, etc.

So when you consider your financial return on investment, also consider your ROTI. What you may have to give up in time, to achieve certain returns, may not make the investment worthwhile.

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