We visited our daughter and her husband the night they closed on their new home. As we were bringing things in, we heard loud crackling. Looking behind us, less than a block away, flames were engulfing another home. As our daughter was experiencing the joy of their first home, another family was experiencing a terrible loss. Isn't that a perfect metaphor for this year?
While every year is full of gains and losses, 2020 has many of us focusing on the losses. And, while we should notice the gains, I encourage you to not run from the losses.
The poet Rumi wrote, "The cure for the pain is in the pain. Good and bad are mixed. If you don't have both, you don't belong with us." Staying in the pain is what heals us.
This serves us in our financial lives. When we are uncomfortable with our money, this signals that there is something going on. We may choose to ignore it, but it will leak out in other ways - everything from excessive risk-taking to marital strife. Examining the discomfort is a much better approach because it first helps you to see what is true and then it leads you to taking action.
When the markets fell dramatically in March, many of our clients felt discomfort. But was the cause of the discomfort real? The virus was real, but they worried about their money disappearing long before the virus would. Yet people almost always confuse their time horizons. If you are married and retire at 65, you may still have a joint time horizon of 30 years. That means there is significant recovery time for your investments as long as you don't have to sell them for cash flow. When the markets fell, did anyone think they would not eventually recover? The problem was reacting to the pain rather than sitting with it and realizing that, while this feels terrible, it will eventually end, so I am probably going to be OK.
Clients who are uncomfortable with their spending often react by, you guessed it, spending more! Often their spending may hide some other pain, but for some it may simply mean they don't wish to confront it. Maybe they think they will get bailed out or if they ignore it they won't have to adjust. But ignoring it deprives them of choosing what is most important to them. While we may not like trade-offs, they end up helping us feel appreciative of our choice. And if we made the wrong choice, by sitting with the pain we can understand why we made it.
Whenever we go see our daughter, I now also think of the family who has no home for the holidays. Good and bad are mixed and we all have both. Spend your life wisely.