Afford Anything - PSA Thursday: How to Build an Emergency Fund During an Emergency

Episode Date: April 10, 2020

A weekly segment in which we talk about how to handle money, work, and life in the middle of a pandemic. Here's how to build an emergency fund during an emergency, and how the bear market affects your investment strategy. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Welcome to PSA Thursday, a weekly segment in which we talk about how to handle money, work, and life in the middle of a pandemic. My name is Paula Pant. I'm the host of the Afford Anything podcast. And today we're going to cover two topics, how to build an emergency fund in the middle of an emergency. And the bear is here. What's happening with the markets right now? And how does that affect the way that you should handle your investments during this time of extreme economic uncertainty? So we'll talk about both of those in today's episode. before we do, first, as you know, my not so secret, not even remotely secret, secret agenda for these PSA Thursday episodes is that really what I hope to communicate is the message of flatten the curve. Please take the COVID-19 threat seriously. Please stay home, wash your hands, do everything in your power, to the best of your ability to play a role in flattening the curve.

In the spirit of that, I'd like to share this very sweet voicemail from a member of this community, a podcast listener who is a cardiologist. Here it is. Hi, Paula. This is Stan. I'm a cardiologist over in Baltimore, Maryland, who is currently helping the hospital prepare for the oncoming surge of COVID-19 patients. I just wanted to say how impressed I have been with your latest podcast, not just about how on how to be a socially responsible citizen and a smart investor, but also how intelligently you approached your COVID-19 infection even before you got infected. What you did clearly prevented the infection of many people,

and you were able to see through all the disinformation in the media and see the truth before others did. What you did was a model for, everyone. And I wish that all the people I have been talking to and trying to educate about this could listen to what you had to say. So thank you from a medical professional for being an upstanding citizen and a great role model for how to be responsible during this pandemic. I am glad you're recovering and I hope you feel back to 100% very, very soon. All the best to you and thank you for everything that you do. Take care.

incredibly kind message. And thank you for all of the work that you're doing in helping the hospital prepare for the oncoming surge of COVID-19 patients. Thank you to you and to every medical professional who is listening to this and every medical professional who's not listening to this to all the medical professionals out there and all the health care workers out there. Thank you so much for the work that you're doing. You are saving lives. You are on the front lines. Every day you're putting yourselves at risk. I hope that you get all of the resources that you need and a huge, huge, huge, huge thank you to every healthcare worker and every essential worker, everyone who's involved in the food supply chain, every grocery store worker, major thanks to all of you for

the incredible and very essential, very important work that you're doing. For anybody who's new to this podcast, if this is the first episode that you're listening to, the reference that Stan made to the decision that I made which spared many other people from getting infected. What he's referring to is I tested positive for COVID-19 for coronavirus. Fortunately, fortunately, I began quarantining myself inside of my condo on Saturday, March 14th. I did not come down with any symptoms. Well, I didn't confirm that I had a fever until Sunday, March 22nd. So for me, it was day nine of quarantine when I realized I had a fever. And that fever ended up being confirmed as a symptom of COVID-19. And that underscores the importance of staying at home,

even if you feel healthy, because I felt perfectly healthy when I began quarantining. And it's only in hindsight that I now know that between March 14th through March 22nd, I was infected. I was infected. I was infected and I didn't know it. And thank God I stayed at home. I isolated out of an abundance of caution because if I hadn't, who knows how many people I could have made sick. Imagine if I infected three other people and each of them went on to infect three other people and each of them go on to infect three other people. If I had not stayed at home, I might have, I probably would have. started a chain reaction that would have resulted in dozens or maybe even hundreds of people getting infected.

And so I tell that story to emphasize how important it is to stay at home, to quarantine, to isolate, even when you feel perfectly healthy. The way to defeat this is to assume that you have it. In the absence of any other information, default to assuming that you have it, and that your goal is not to spread it to others, and likewise, default to assuming that every single person you come into contact with has it and that your goal is to not get infected by them. If we change the default assumption into defaulting into assuming that we're all infected and we modify our behaviors accordingly, that's how we can slow the spread. I'm very, very passionate about this issue.

My parents are 79 years old. I'm scared for them, and to every person who's listening, who has parents or grandparents, who are still living, I can't think of anything that is more motivating than that, the desire to protect our families. But speaking of protecting our families, and moving on to the topics of today's PSA episode, one of the major most important ways to protect your own financial health, your family's financial health, is by having an adequate emergency fund. So what do you do if you're worried that your emergency fund might not be big enough? What do you do if you want to build an emergency fund in the middle of an emergency? Here are a few pointers.

First, let's start with how big should your emergency fund be? The standard advice is that your emergency fund should be between three to six months' worth of your living expenses. That said, if you think that there is a risk to your income, if you're worried that your hours might get cut, you're worried that you may get furloughed, you're worried that you may lose your job, then building this emergency fund to represent between six to nine months of living expenses is a good idea. I don't want anyone to worry that if they're holding nine months worth of living expenses in cash, that they're holding too much cash. This is not the time to worry about, am I holding too much cash? In fact, there are some people, people who either have riskier investments or who have volatile income, like people who are self-employed, some people would choose to even have a year's worth of savings set aside. Now, I'm not saying that you need that much.

I think six to nine months is a good amount. to aim for for people who are worried that their income may be in jeopardy. But I give that 12-month example to illustrate that up to 12 months, I wouldn't worry about having too much cash sitting on the sidelines, not being invested, because the opportunity costs that you pay in not having that money invested is the price of liquidity. And liquidity and its close cousin flexibility is very valuable. So the amount that you should be aiming for is anywhere between three to nine months, depending on the security of your job. And also depending on if you have two incomes or one income. If you're a dual income couple, you have a stronger safety net because if one person

loses their job, if one person gets their hours cut, the other person will still be bringing in income. Whereas if you are single or if you are a single income couple, then you're more vulnerable. And so you'll want a stronger safety net. So how do you build this in the middle of a crisis. Well, the answer is going to depend largely on whether or not there has been an interruption in your income. So I'm going to give two different sets of advice, one for people who have not seen any changes to their income and the other for people who have. If you have not seen any changes to your income, or I should say any negative changes, if you have not seen any decline in your income, then the quickest, easiest way for you to come up with that extra.

cash to build that emergency fund is by focusing on your spending. There are most likely already inherent changes in your lifestyle as a result of this social distancing that are already causing you to save money. You're not putting as much gasoline in your car. You're not going to restaurants. Maybe you're still ordering delivery. But even if you are, I'm guessing that for most people, your restaurant spending has probably gone down. You're not going to movie theaters. You're not going to concerts. So there are already naturally some lifestyle changes, but I'd like you to

focus on two things. Number one, how to amplify that. Where else can you cut back? And number two, how to capture that. Because oftentimes when we reduce spending in one area, we don't actually save that money. We transfer

it to a different area. So you may have reduced spending in a handful of different spending categories, but if you are not tracking exactly how much that is and then capturing it by moving that money into a savings account or into some type of separate account, separate from the checking account from which you pay your normal daily bills. If you're not capturing that money, then you're likely to spend it on other things. Digital purchases, online shopping, you know, it's psychological,

it's human nature that when we see a given amount of money in our checking account, we feel like that money can be spent, and subconsciously, our spending decisions meet what we think we can afford. Typically, I am not a fan of meticulously line itemizing your budget. That type of behavior over the long term is very hard to stick with. There tend to be low levels of compliance. But given that for all of us, for everybody, because of social distancing, our spending habits have changed very rapidly in the last month. This would be a good good. time to sit down, take a look at all of your accounts, every credit card, every debit card, every checking account that you have, and look at where every penny is coming in and going

out. I'm not saying that you should do this forever because this type of meticulous budgeting is very difficult to stick with long term. But get a snapshot of what's happening right now at this moment because of the fact that it has changed. And the information, the data that we all want to know is, how has it changed for each of us? How has our spending changed over the course of the last month, now that most of us are under shelter and place orders? Track your spending down to the dollar.

Take a look at that amount and use that to help you capture the dollars from the categories in which you've reduced your spending rather than let those dollars transfer into other categories such that one or two or three months from now, you're not scratching your head going, gee, you know, I didn't spend any money on gas, but somehow my budget didn't change. I don't know where any of that went. So capture, don't transfer. That's key.

Now, as I said, there are two things. One is capturing that I've just been talking about. The other is amplifying. So inherently all of us are spending less, most of us, I should say, are spending less, particularly with regard to commuting costs, travel expenses, things of that nature. So how can you ethically amplify this? How can you increase the amount of savings that you are currently saving and stretch it to beyond just what has happened naturally over the span of the last month? Now, when I say ethically, what I mean by that is there are some expenses that I would argue that the most ethical decision is to still continue paying for those services, even if you are not receiving them. So, for example, if you have a house cleaner who comes to your home once every two weeks, and this is a specific individual who relies on that income, needs it to buy groceries, if you're suspending that house cleaning service, I would argue, that in the interest of aligning your money with your values,

and in the interest of spending in a way that reflects your priorities, that if you suspend that cleaning service for the time being, you should continue paying them. Think of it as essentially you giving them paid time off, which is something that they, as gig economy workers, do not have. And in this example, I'm speaking to individuals that you hire directly. There may be house cleaners who work for cleaning companies, that may get some paid time off. I don't know. It depends on the company. But the point is that there are some

expenses that your conscience will allow you to cut and other expenses that your conscience may not. And if you're on the fence about it, then that's your conscience telling you, hey, we all have to be looking out for each other right now. And if you have the ability to not make somebody else suffer from a cut to their income, you know, if you have the ability to, in essence, give somebody some paid time off or if it helps, think of it as giving them a bonus, then that's great. But there are other expenses that your conscience will allow you to cut. Like, for example, take a look at all of your subscriptions. Do you, even in a time of pandemic, do you need to be subscribed to HBO Now and Netflix and Hulu

plus and YouTube premium? Or can you cut two of those? Do you need as much insurance on your cars? Or can you reduce your level of car insurance? Those are some of the ways in which you can look at every line item within your budget and see where you can make further cuts ethically, cuts that don't harm the most economically vulnerable people in our communities. And in doing so, you can accelerate that build up of your emergency fund. If you go to afford anything.com slash community, We have a group there. It's called one tweak a week, or it's a topic there that we cover, and it's one tweak that you can follow every single week in order to shave a little bit of money off of your normal daily spending. So afford anything.com slash community where you can join our community platform for free and check out our long list of weekly tweaks. So I've just talked about amplifying your savings and then capturing those savings through tracking.

And if there's been no negative interruption to your income, then that is the best place to spend your energy. But what about those of you who have had some type of interruption to your income? Maybe your hours at work have been cut. Maybe you run a business and some of your clients have canceled their contracts. Maybe you lost your job. What can you do? Well, first of all, everything that I said in the last 10 minutes about tracking every penny that's coming in and going out, identifying where you can slash expenses

and then making sure that you capture those savings by moving them to a separate account, all of that applies to you as well. And in your case, I would say it applies even more so. So when it comes to decisions about how to slash your spending, making even more drastic cuts, going to a rice and beans diet, extreme times call for extreme measures. In addition to that, look for programs

that can offer temporary relief or support. So, for example, if you are self-employed, a small business owner, the SBA has what's called the Paycheck Protection Program, and it is a loan. Technically, it's a loan that you take out from the SBA that is meant to keep people employed. And so the SBA will forgive loans as long as all of your employees are kept on the payroll for eight weeks. And the money that you get from the SBA loan, from the paycheck protection program loan, is used for. payroll, rent, mortgage interest, or utilities. And if you are a sole proprietor, an independent contractor, if you're self-employed, you qualify because you are your employer of yourself.

And so you need to keep yourself on the payroll. So the loan will be forgiven as long as you use the money to keep yourself or your employees on the payroll. And if it's not forgiven, like the forgiveness will be reduced if you lay people off, or if you reduce their salaries or wages. But even if it's not forgiven, the loan has a 1% interest rate and a maturity of two years. So it's a very, very good opportunity for anyone who's self-employed, any sole proprietor, any independent contractor who is struggling at this time. Sarah Blakely, the founder of Spanx, has created a fund in which she will be giving $5,000 in funding to 1,000 female entrepreneurs.

So she's pledged a total of $5 million, which will be divided among 1,000 female entrepreneurs, to help keep them and their businesses afloat during this time. So you can apply for that on the Global Giving website. There is, of course, the CARES Act. That act will allow some Americans to receive a one-time direct deposit of up to $1,200. Married couples could receive $2,400 plus an extra $500 per child. If you are an employer, if you run a small business, you can delay the payment of a portion of your 2020 payroll taxes until next year, the next two years actually, 2021 and 2022. If you want to make certain charitable contributions, there is a provision that provides for an above-the-line deduction for charitable contributions, which means you may be able to deduct charitable contributions even if you don't itemize your deductions.

talk to a tax professional about the details. RMDs are suspended, which is great news. So required minimum distributions from 401Ks and IRAs are suspended, which means that seniors don't have to convert paper losses into real losses. I know that doesn't actually apply to what we're talking about. I mean, it's part of the CARES Act, which is why I bring it up right now. But I know that doesn't really apply to how to save money if you've had a reduction in your hours or a reduction in your income.

That applies more to. the second thing that we're going to talk about, which is how to manage your investments. But still, that's a pretty cool thing. So zooming out a bit, the CARES Act, the SBA Paycheck Protection Program, private grants, look at all of these things for avenues that can give you some relief now that your income has been reduced. On top of that, if you have taken a hit to your income, then unfortunately you will have to look for other ways to bring in income. and now is a very hard time to do that. Your strategy is going to depend on the type of income that you've been making.

If you are a small business owner, then most likely the most effective course of action is going to be to stay inside of your primary business and find a way to get your primary business to pivot its monetization strategy in a way that befits the current times. So, for example, if you tend to work with a lot of clients and some of those clients have pulled out or broken their contracts or canceled their contracts, could you pivot away from client work and diversify that business into bringing in some affiliate income or commission-based income?

You know, that might be one example. But the broader concept that I'm trying to illustrate here is if you are a small business owner, staying inside of your current business and finding a way for that current business to pivot is likely, to yield faster results than trying something new, completely new and different. Because when you start something that's completely new and different, you have to go through that period of allowing it to grow the initial momentum. You have to go through that period of allowing it to go from zero miles per hour up to 25 miles per hour. And that initial acceleration takes a lot of energy. It takes a lot of time. When we are in non-crisis mode, then we have time. But in crisis mode,

when we're in a time crunch, and the objective is to make money now, to make money this week, not six months from now, then the best course of action for most people, for most small business owners, is going to be, don't try to start something new, stay inside of your primary business, and pivot the monetization strategy within it, if necessary. For those of you who are done, to employees who have gotten laid off or you've seen a reduction in your hours. Look to, of course, unemployment benefits. Apply for those if you are eligible. Also look for services that you can provide. Freelance opportunities. This is a really good time for anybody who's selling any type of digital services. Freelance writing, graphic design, data entry. If you are fluent with any type of

specialized software like Adobe Illustrator or Photoshop or any type of specialized marketing tools or CRMs. Even if you're proficient at Excel, leverage those skills into picking up freelance assignments that work from home digital work. There's a difference between freelancing versus starting a business in which you, a scalable business in which you offer a product or service. And that scalable business that sells a product or service over the long term may, depending on the industry, may have more opportunities, may be able to make more money over the long term. But it takes longer to get it going. The beauty with freelancing is that it's immediate. And so if you are trying to choose between those two options, if you're wondering whether you should try to start some sort of business or try to freelance with clients,

and if you are in a vulnerable position right now with your income, if your income has been reduced, then between those two choices, freelancing is likely to get you money faster. Now, that said, the freelance landscape is more competitive these days than it typically is. There are more people looking for freelance work, more people looking for gig work. My recommendation would be do not race to the bottom in terms of prices. don't try to compete on price by undercutting others, because that is a competition in which everybody loses. Instead, niche down your offering, whatever your skill set is, niche it down, make it tailored, make it hyper-specific,

because that level of specificity will allow you to gain traction more quickly within a smaller market. So it can be counterintuitive, but when you shrink your potential pool of clients or buyers, when you shrink your market by offering something that is a very tailored solution for a small group, you can then more quickly make inroads within that small group. Remember, you're not going for scalability right now. You're going for the objective of getting your income back to where it used to be.

Now, this conversation started with the question of how do you save your emergency fund in the middle of an emergency? And we've just talked about ways that you can approach this depending on, what your current income situation is. There are a few other options as well that are options of last resort. So if you really need money, you could reduce your retirement, if you are still getting paid, you could reduce your retirement contributions a little bit temporarily. Reduce it down to the point at which you are still getting your full employer match. So don't ever go under the threshold in which you're leaving some of that employer match on the table.

But you can temporarily reduce. And I almost you know me. If you've been listening to this for a long time, you know me. I almost never say this. But if you need to, you can reduce or delay some of your retirement contributions until you're back on track. And I say delay because you might be able to make up for that. In November or December, you actually have until tax day of next year, tax day of 2021. to make contributions that apply to this current tax year, tax year 2020.

So if you are in a precarious situation right now and you really want to shore up your emergency fund, you could reduce your retirement contributions down to only getting your full employer match and no more. And then pledge to yourself that in the fall or winter of this year or in the spring of next year at the latest, you will try to save even more aggressively for retirement to make up for that so that ultimately the net contributions for 2020 will be the same. That's one option that you have. If you're worried about your emergency fund, if you're worried about your income. Another option is a home equity line of credit. I hate to say that because when you take out a HELOC, first of all, a HELOC is a callable loan. Secondly, your house is on the line. This loan is being secured by your home, which means if you

don't pay it back, you could lose your home. So I hate to even bring this up. But if you are in a break glass in case of emergency situation, if you absolutely, if you need money in order to get groceries and to pay the electricity bill, if your options are a he lock or starve, then you could take out a helic. You could tap your home equity. But please be very cautious about this. It should be used only in dire situations. If you are a renter, reach out, if you are struggling, if you have lost your job, if you're single and you've lost your job, if you are a dual income couple and both of you have lost your jobs, reach out to your landlord and let them know.

Many landlords are willing to be flexible. I sent a text message to all of my tenants saying, hey, I want you to know that the last thing in the world that I would ever want you to do is drive for Uber with a cough for the sake of paying rent. Please don't do that. If you are in a tough financial situation, let me know, and we will figure something out together. But please don't endanger your own health and don't endanger public health. So I sent a text message to all my tenants saying that, and there are plenty of landlords out there who are like me, who are willing to be flexible and to work with tenants. So if you are in a tough position, if you're worried about your ability to pay the rent, reach out to your

landlord and let them know and ask if there's something that you can work out. It's much better to be upfront, be proactive, and have frequent clear communication about this. It's much better to do that than it is to just not pay the rent on the first of the month and see what the fallout is. If you get in front of the situation, if you proactively contact your landlord and voice your concerns, you'll be much more likely to be able to work something out. So those are some tips on how to build your emergency fund in the middle of an emergency. Next, let's talk about what's happening with the markets right now. In the last 13 days, the S&P 500 has gained 24.7%.

So it's now gained back 48% of what it lost. As of Wednesday, April 8th, the S&P 500 was back at June 2019 level. So it had only erased 10 months' worth of gains. So we've seen a big rebound recently. What does this mean? Number one, this illustrates why it's so important to hold. If you've been listening to this show since the beginning of the pandemic, you've heard me say over and over, hold, hold, do not panic sell. And I've heard many people, as I've said, the psychology of panic selling is really interesting because people don't think to themselves, I am panicking right now.

Instead, people often rationalize by saying, well, something like this has never happened before. This is unprecedented. There's never been a global shutdown like this. There's never been a big pandemic like this. So aren't the rules different now? That's the thinking that people often use in order to justify selling, because they'll say to themselves, aren't the rules different now? And don't you think it's going to get worse so I should sell in order to not lose anymore?

That's the rationale. But the fact of the matter is we do not know the future, first of all. We don't know if it's going to get worse or get better. And as we've seen in the past two weeks, the S&P 500 has now returned back to June 2019 levels. The S&P 500 has gained. So the people who did panic sell, the people who didn't listen to the advice to hold their holdings, did end up converting paper losses into real losses. If they were to try to buy back in right now, they'd be buying back in at a higher price than the price that they sold at. And so that's why it's so important to not try to time the market, to hold your holdings, because we have no idea what's in store.

And by the way, to the argument of we've never seen anything like this before this time it's different, that feels true every time it happens. The 2008 Great Recession? Wow, that felt very true back then. We'd never seen anything like that in our lifetimes. It felt unprecedented. The dot-com bubble burst. We had never had something as groundbreaking as the internet coming into the majority of American homes. That was a paradigm changer. That was unprecedented. 9-11. Nothing like that had ever happened before. So every time it feels. new because it is new. Every time it's something new, every time it's something different, and every time over the long term, we recover. But in the short term, we experience a lot of volatility and we cannot reasonably predict if things are going to go up or down. We cannot reasonably predict what the markets will do tomorrow, and that's why it's so important to not try to time the markets and to hold. So that's number one. Number two is arguably, stocks might be kind of expensive right now. Stock prices typically reflect earnings expectations and earnings expectations

are low. So for stocks to be priced as they are relative to the type of earnings that we might be able to expect for the rest of 2020, if you wanted to argue that stocks are expensive right now, that would be a very valid argument. But that being said, beware of having a fear of heights. Because people have been saying that stocks are expensive for a very long time. Starting in 2014, I began hearing people say, oh, geez, the market's been rising for a while. Stocks are expensive now. I don't think I want to invest because I'm worried about the next pullback. Starting in 2014, people were saying that.

And those voices grew louder throughout 2015, 2016, 2017, 2017, 2018, 2018, 2019. but the people who sat out because they were worried that the market was too expensive, that the market was too high, they were worried about the next pullback. The people who in 2017 or 2018 or 2019 sat out of the game because they were worried that everything was too high, they still did worse than the people who participated. The people who sat out still underperformed, the people who participated. because, as I said, right now the S&P 500 is back to its June 2019 levels. So if in January of 2019 you sat out, you would still have underperformed as compared to someone who participated throughout. And so a fear of heights will only hold you back. The key to long-term investing success is to invest every month or every paycheck, invest at regular periodic intervals,

That way, your dollar cost averaging into the market, which means that you are naturally taking advantage of low prices. That same contribution of money will naturally pick up more shares when shares are cheap, and it will naturally pick up fewer shares when shares are expensive, and only invest money that you plan on holding within the market for at least 15 years. If you need to access your money in the next five years, then that money does not belong in equities. The money that you have that's invested in equities, meaning in stocks, in the stock market, should be money that you don't plan on touching for at least 15 years. And if you think that's too conservative, if you want to be a little bit more aggressive, maybe 10 years at the

absolute outside edge, but certainly no less than 10. If you need to access that money in the next 10 years, it does not belong in stocks. You can put it in cash or cash. You can put it in cash. equivalence if you need it within the next five years. You can put it in bonds if you need it within five through 15 years and put it in equities for the money that you need 15 years and further out. So having a long holding period combined with dollar cost averaging and combined with not timing the market, staying in the game, those are all the critical elements, the principles of personal finance that lead to long-term success. What I said about having a bond allocation for the money that you might need to access in between five to 15 years.

That's the reason that as you approach your withdrawal dates, as your timeline to withdrawal nears, your asset allocation is going to shift a little bit every year to reflect the fact that your timeline to withdrawal is getting closer and closer. And so you'll rebalance your portfolio, again, a little bit every year, to meet your ideal asset allocation. And that asset allocation is going to be based on that timeline. to withdraw. But the central message here is don't try to time the market because it's extremely volatile right now and we do not know what it is going to do tomorrow. And it's difficult to make

comparisons between this and any other historic event. Some people have asked, isn't this comparable to the Great Depression? Isn't it possible that our GDP could fall between 30 to 50 percent, as some analysts have predicted? I don't know. Nobody knows. That's the thing. No, Nobody knows what's going to happen. And anybody who claims that they know, anyone who claims that they know with some degree of certainty what will happen in the future is somebody who is not going to be held accountable for being wrong. Yes, the current collapse in economic activity is at least as bad as the Great Depression, but the government response to the 1929 Depression was terrible. And that took place in an era when we did not have the FDIC. We did not have many of the institutions that we currently have. It was a different era, and it makes those comparisons truly apples and oranges. They're different times. They're different events.

And so we cannot over extrapolate from any historic event because necessarily the context was different. When the pandemic hit in 1918, the influenza pandemic in the United States in 1918, the stock market basically didn't react, almost nothing. Nothing happened. But that was an era when only 5% of U.S. households owned stocks. Actually, let me amend that. In 1929, in the Great Depression, at that time, 5% of U.S. households owned stocks. So in 1918, it was probably less than 5%. So participation in the market from the average mom and pop investor, that just wasn't there during the last pandemic, during the influenza pandemic of 1918. The 401k system had not been set up yet. The IRA system had not been set up yet. And so can we look to the last pandemic to see, to gain any information about what the markets might do? No, we really can't. Because during the last pandemic, the markets did nothing. They didn't react. And that was because the times then were different. And they're different now and we don't know what's going to happen. And that's why you cannot time the market. And when you can't time the market, then you fall back on the classic time-tested principles of personal finance, which is make regular contributions, have an asset allocation that is appropriate for your timeline to withdraw, rebalance at regular periodic intervals, such as annually, don't rebalance too often, don't make it more often than quarterly, and hold stocks

for the long term. We're playing the long game. So, thank you for tuning in to this week's PSA Thursday. My name is Paula Pant. This is the Afford Anything podcast. Coming up on Monday's episode, we have an interview with Chris Gillibault. He has traveled to 192 countries, and he has recently written a book about money. So we'll be chatting with him. That'll be on this Monday's episode. Make sure that you hit subscribe or follow in whatever app you're using to listen to this podcast so that you don't miss that episode or any of our other future episodes.

Thank you again so much for tuning in. Stay safe out there. Stay home. Stay healthy. Look out for one another. Look out for your neighbors, your friends. and please be part of the effort to flatten the curve. Thank you so much for tuning in,

and I will catch you in the next episode.