In this current age of unprecedented international chaos and uncertainty, I’ve observed that many of my clients, friends, and family members—and myself—are concerned about the varied, wide-ranging ways that COVID-19 will affect their lives. From cancelled events to school closures to remote working protocols, it seems like, suddenly, nothing around us is familiar or predictable. More than anything else, many of us are worried about our finances.
Because of my role as a financial advisor, I know folks often wonder, “How does Bruce manage his money?” I don’t usually discuss my family’s finances, but this feels like an important time for me to have this discussion with you, because we are all in this together.
In times of high volatility, I try to keep calm—like I recommend to clients, I make an effort not to look at my portfolio too often—but, being human, this is not always the easiest thing to do. These last few weeks of both market volatility and the coronavirus pandemic make me as uncomfortable as I am sure you are. The natural tendency is to want to “do something,” but that is almost always a mistake when it applies to long-term investing. For me, calm does eventually prevail, and, in fact, I try to invest more in down markets to keep my allocation at 50/50. My returns have been as expected: nothing to brag about at parties, but consistent with my expectations.
Here are the basics:
- I invest the same way I—and my firm—advise clients to invest: a foundation of passively managed, globally diversified mutual funds, ETFs and bonds. I do have an account “on the side” where I buy some individual stocks, but that is less than 2% of my investable assets (and only four stocks), and truthfully, I’ve been wrong more than I’ve been right on what and when I bought and sold these. It is important to note that I have generally purchased these stocks more for my own entertainment, rather than serious investing.
- I have 50% in stocks, and 50% in bonds. This is rather conservative, but I also have a third of my net worth tied up in my firm, so that really is in addition to my equity portfolio.
- My wife and I have a charitable Donor Advised Fund that helps us to support the charitable causes we are passionate about.
- I max out my 401(k) contributions every year and have been doing so for 30+ years. My firm has a relatively small life insurance policy on me, so they can buy my shares from my heirs when the inevitable occurs.
- Because I am the financial planner for my household, my wife, with my total backing, has her own financial advisor (one of my partners). We decided that she needed the support, and that it was important for her to establish her own advisor relationship.
Obviously, each of us has a unique financial situation, but what I hope you will take away from this is that the best course of action is to keep calm and carry on. I’m following the same advice that I and other financial advisors are giving to you, and I am not letting emotions or fear control my investments. My strong recommendation is that you hang tight for now and ride this out—the coronavirus is not going to be here forever.
Of course, we are here to answer any questions you may have as we navigate this difficult time together.
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Bruce is a Certified Financial Planner, Wealth Advisor, and Chairman of the Board at Willow Creek Wealth Management. Willow Creek is a fee-only financial planning firm in Sonoma County, CA serving clients throughout the San Francisco Bay Area and across the country. Willow Creek offers comprehensive financial planning encompassing investment management, retirement planning, tax planning, charitable giving, sustainable investing, and more.