Steve Alverson, CFP®

Financial Advisor

I’ve been a financial advisor for the last 7 years and have been mentored by two talented advisors in middle Tennessee, who have a combined 65 plus years in the industry. I am often being asked, “What are you guys telling your clients right now?” We are suggesting the following three principles to consider.

1. Increase Cash reserves

Folks, never in our history have we seen an economy almost come to a halt so hard and so fast. The biggest danger we have noticed is there are not enough cash reserves. This applies to people, businesses, municipalities, and large institutions.

Personal finance personalities such as Dave Ramsey, Suzie Orman, and the late Larry Burkett have stressed the importance of an emergency fund of 3-6 months’ and in some cases upwards of 12 months’ worth of expenses set aside.

I would argue every business should strive to do the same.

For example, the median days of cash-on-hand for airports in the US is 450 days or ~15 months. Airports most likely will survive this thing. I sincerely hope your business will too.

2. Don’t sell your home in a tornado

I live in Nashville and our city was recently devastated by a tornado. I remember the siren going off just after midnight. It was loud, and we had little warning, less than 15 minutes later, East Nashville resembled a war zone. 

When the market is extremely volatile, much like what we experienced in March, hold tight and let the dust settle. You would never try to sell your home during a tornado. Let the storm pass, evaluate the damage, and wait for brighter days. Treat your investments the same.

Be confident about your financial journey. Schedule an appointment with our guides today.

3. Know what you own

No two individual financial situations are the same. Neither are two money managers, small businesses, bonds, stocks, mutual funds, ETF’s, real estate properties, commodities or even cryptocurrencies.

We witnessed a nationwide rush to bond funds as a ‘safety net’ right when this pandemic started. However, a rush to bond funds might have caused a similar investment experience as the equity markets. Why? Some of the bond managers reached to buy junk bonds to increase their yield.

I would never purchase a low rated bond in any of our clients’ portfolios, and neither should you.

Know what types of investments you own. If you outsource your investment management, be certain of the intentions and philosophies of those managing on your behalf.

Overall, I would say to stay the course. This is so important. This last pandemic has taught us that the world moves at such a fast pace now. It has never been more important to know what you own, resist making major changes in periods of uncertainty, and have plenty of cash on hand… from the smallest to the largest budget.

If you have any questions, thoughts or comments, I’d love to discuss this with you further. Thank you for reading! If you enjoyed it, please hit share!

Any opinions are those of Steve Alverson and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results.