Welcome back to PSA Thursday, a mostly-weekly segment in which we talk about how to handle money, work, and life in the middle of a pandemic.
Today, we have a hybrid discussion of work (in the context of business) and money.
How can you find business and investment opportunities in today’s tough pandemic bear market?
What should you do to emerge from 2020 stronger than you started?
We tackle this question in today’s PSA Thursday episode. Here are 7 specific, immediate actions that can set you up to succeed in this recession.
#1: Keep your plans intact.
Don’t rewrite your life plans based on fear or anxiety.
If you’ve spent years planning to quit your job in 2020 so that you can start a business, write a book, take a mini-retirement or embark on total retirement, maintain your vision.
I quit my job in 2008. I worked as a newspaper reporter, which means I quit a job in a shrinking industry in the middle of the Great Recession. But I had enough of a financial runway to support myself, from savings, for two years. And I knew that languishing in the wrong job would only cause me to lose valuable time.
Reassess your financial situation. Run a spreadsheet. Confirm that at a logistical and practical level, you’re ready to take the plunge. And if you are — if the spreadsheet confirms that you’re financially ready to take this risk — don’t let fear hold you back.
#2: Top up your emergency fund, if required.
Keep a minimum of 3-6 months of living expenses as an emergency fund. If you’re vulnerable to a layoff or furlough, if you’re self-employed, or if you’re a one-income household, increase this to 6-9 months.
If you want a deep dive into this topic, listen to our PSA Thursday episode on How to Build an Emergency Fund During an Emergency.
#3: Invest regularly.
Make recurring, automatic periodic contributions (such as monthly contributions or per-paycheck contributions) to your retirement accounts. This allows you to dollar-cost average, which is a system that automates taking advantage of market dips.
#4: Invest lump sums.
You might collect a commission or bonus. Or maybe you’ll downsize from a two-car household to a one-car household, and collect a nice chunk of change from the sale of your second vehicle.
Don’t be afraid to invest this lump sum. You can invest this into starting a side hustle or small business. You can invest this into rental real estate, either as a down payment or by picking up a cheap property in cash. You can invest this into the market.
Don’t hoard excessive cash. Assuming you have an adequate emergency fund, first and foremost, invest new lump sums in assets that fit your goals, timeline to withdrawal, age, and risk tolerance.
#5: Take online classes.
This is a fantastic time to take online classes in absolutely anything that you are interested in learning: photography, programming, speaking a foreign language, playing a musical instrument, and of course, real estate investing.
#6: Create an original piece of work.
Build an app. Write a book or ebook. Create a website.
This is an amazing time to develop a product or service and start a low-cost business, so that you’ll be poised to hire and grow when the economic recovery kicks off.
#7: Think about hiring a team.
You might hire contractors to make renovations on your rental property. You might hire researchers or designers to enhance your website. You might hire a bookkeeper to organize your side hustle financials.
Many people are looking for remote, flexible work. If you can start a small business that provides some of that work, you’re creating a massive win-win.
You may not have a business yet. You may not even have an idea. But this is an excellent time to plant the seeds, to lay the groundwork, so that you’ll be ready to hire in 6-12 months.
#8: Stick with broad-market index funds.
It’s tempting to invest in individual stocks, but keep the majority of your portfolio in broad-market index funds.
#9: Expect volatility.
On March 12, 2020, the market endured its worst one-day drop since October 1987. The next day, it experienced one of the biggest single-day leaps in history.
The market will be volatile. Expect a rollercoaster, and don’t get caught up in the noise.
- 7 Expensive Mistakes That Rental Property Investors Make – eBook
- Your First Rental Property
- PSA Thursday episode on How to Build an Emergency Fund During an Emergency
- One Percent Challenge
- Start a Blog