The Sense of Long Term Loss
I was talking to my neighbour Sue on Monday. Sue is a spritely 70-year-old widow, who spends much of her days helping children read at one of the local schools. I was checking in on her, as I do regularly just to make sure she didn’t need anything.
We naturally got to talking about the Coronavirus and its impact overseas and what that might mean for us here in NZ. Sue said she had already had a call from her son, a doctor in Auckland, telling her at that at her age she shouldn’t go up to the school because overseas it’s been shown that young children are great transmitters of the virus, albeit they may not show any symptoms.
I know Sue really loves contact with her family, most of whom live outside of Wellington, but she also really loves contact with the kids at the school. It is what gives her life a lot of purpose. She told me, she listened patiently to her son, the doctor, and then told him that unless the school advised otherwise, she would keep going up to help.
Sue then went on to tell me that she was a young girl at a small school in the UK when the 1957 Asian Flu Pandemic arrived in England. The 1957 flu was thought to be responsible for over 3500 deaths in England & Wales alone, with some millions dying around the globe. She especially remembers it because of a particular class she took with 4 other girls at her small school. One day they got to school, and their favourite teacher wasn’t there because she had died of the flu. As Sue told me this, I saw for the briefest of moments a look, that showed in her eyes, that she was still affected by that memory all these years later, the loss of someone she cared about. She then said ‘’I can’t control everything and at my age Warwick, something’s going to get me, so I am carrying on as normal’’.
Later in the day I was speaking to another client whose daughter gets married in a few weeks’ time. There are about 150 people invited, including over 20 family members due to fly into NZ from Europe. Naturally they are already saddened that many of them won’t now be able to make it because they wouldn’t arrive in sufficient time ahead of the wedding, to self-isolate for 14 days.
Each of these people - Sue, her son, the doctor and the couple whose daughter is about to get married, all sensed, or are afraid of loss. The doctor feared for his mum Sue, Sue the actual loss of the beloved teacher and the woman getting married, a sense of missing out on happy times with loved ones. No one mentioned money in all this, rather the loss of loved ones or time with them was the overarching emotion.
A sense of loss of wealth is also real and gripping many as a result of the Coronavirus. It is a real emotional response to something outside of their, and all of our control. What we can control are two things. Firstly, our emotional response, which will determine our subsequent actions. Secondly, we can also control how we have our wealth structured, so therefore what it will provide in the future.
If our wealth is all tied up in cash our emotions will be one of relief when market volatility strikes. This will also be combined with long periods of loss of control as we see low bank returns, tax and inflation eat away at our purchasing power.
If it is all in property, we will enjoy tax free capital gains and a steady income stream. This will also be combined with worries about what the Government will do next to us as landlords, lack of liquidity, and the often low returns compared to the large capital value tied up in the property.
Of course, if you’ve had all of your money in shares you will have enjoyed that last 10 years of unparalleled returns, far and away outstripping the effects of tax and inflation. This is also combined with periods, such as now, when volatility strikes and values drop rapidly.
So, what to do? We know there are things we can and those we cannot control. Diversification allows us to control our investment outcome, which helps preserve long term wealth and so have some effect on our emotions in times such as these. Diversification provides the benefits of all the asset classes, each helping offset the downsides of the others. If you would like to chat through how you are feeling, and check in if your structure is right for the future, please call or email and we will be happy to talk this through with you.
The views and opinions expressed in this article are not intended to be a personalised service for an individual retail client. The views and opinions are general in nature, may not be relevant to an individual's circumstances, and constitute class service only. Before making any investment, insurance or other financial decisions, you should consult a professional financial adviser of FoxPlan Limited. You can find more important information about us here.