Was your risk management sufficient coming into Covid-19 Crisis?

About 8 years ago I had someone in Perth tell me he was a millionaire because he had just purchased 3 houses over the span of 2 years. Unfortunately a lot of people don't quite understand the invisible balance sheet.
I've realised it's better not to burst peoples bubble and let the market pick the winners and losers.

Central bankers have always tried to iron out the business cycle, but in hindsight, this has probably reduced peoples ability to think about risk management, and in turn may have caused a larger headache than the smaller ones they were trying to solve.

 

Not by this old fart.

As I have posted a number of times on PC, I measure our Net Worth at the end of every Quarter. I graph the numbers since I started in January 2004, 16 years ago.

As I have also posted on PC, I track our spare cash outside Super twice a month. This is our cash buffer/reserves. Being doing this for 4+ years and I graph this as well.

IMHO, both are critical in maintaining a lifestyle (especially in retirement). I am amazed that more people don't track these two critical measures. It greatly assists with SANF.

With COVID-19, our Net Worth has taken a hit (down 7.4% for the March Quarter, down 2.8% YoY), no surprise there. Our spare cash (outside Super) has gone up since the pandemic hit (a little surprisingly initially until one realises we are spending less in lockdown).

I believe everyone should be tracking these two measures, not only during the good times (so we know how we are traveling) but especially during the tough/bad times (so we can take corrective action early).

Alas, I feel my beliefs will continue to fall on deaf ears

 

Apparently, in Perth, they keep up with the Armstrong-Joneses.

Gotta have a hyphenated surname or you are a nobody .

 

Good points

also seems some think equity is actually cash

 

yes, but keeping up with the Joneses will never work in life. The most miserable people are those that are not happy with what they have and continue to compare. This will seriously effect mental health

Have a g/friend who is caught in this trap, its ruining her life, but she has to see it before she can change

 

Really? I think Perthians are pretty down to earth bunch. I know a few on this forum

 

Cashflow is king/queen in retirement.

 

... and assets generate cashflow; liabilities reduce it.

That is why Net Worth and Cash Buffers are critical.

If cashflow is reduced, then one can:

1. Cut down on discretionary spending (my first preference),
2. Tap into one’s cash buffers (my second preference) or
3. Sell some assets (not my preference)

 

It is an old east-coast joke, probably way before you time .

 

At the end of March,i had a 2 minute phone call from my Sales Manager,2nd largest new home builder in S.A to have April off on stand down and will re assess the situation in 30 days,In mid April, only 15 days into my imposed stand down, my position, along with 18 other colleagues,were made redundant.I will fare ok on provisions i have always implemented with property,i doubt this builder, who is a huge name will survive.

 

Right... lol

 

Sorry to hear this. We going to probably see more of this

My daughter was made redundant recently, as a parent hard not to feel for her

 

Glad to hear you’ll be ok. Would have to be a big shock to others. I think there will be more cuts to jobs still coming up

 

Yes, even the Sales Manager was let go, employees of between 1-15 years, gone, all that experience, gone in the stroke of a pen.The Golden Handshake was ok, for me anyway,but yes, i think some were blind sided by it.

 

I’m hearing a lot of redundancies, don’t know why employers aren’t offering jobkeeper payment. Try to keep positive

 

Agreed. Many now are greedy thinking the good times roll-on forever and so over-leveraged, never thinking about the rainy days, they can't even last 6 weeks.

 

The idea of holding back mortgage repayments for those who need it has got to be relieving the pressure for many.

 

It definitely will but when will it be paid back and by whom?

 

Just lengthening the loan period. If it's a 30 year loan period and repayments are paused for 6 months, the repayments can then be that 30 years plus 6 months.