Disaster Preparation
I have experienced a couple of major disasters in my life - two hurricanes when I lived in Hawaii in 1982 (Iwa) and again in 1992 (Iniki). Unfortunately, my family was not well prepared for both of those events and the aftermath was a real struggle, especially Iniki which was a Category 5 storm and knocked out power on Kauai for months. The community was very resilient, however and everyone helped each other to recover, sharing food and other resources. I remember we had a generator and we let our neighbor use it to power his refrigerator at night to keep his perishable food fresh. Honestly, once all the perishable food was gone, if it wasn't for the military passing out MRE's, there were some days that we might not have eaten very much.
After the 2011 Tsunami that hit Japan, I purchased two Red Cross 3-day survival back packs for my family and I keep them in the garage. I bought two more recently (I found some cheaper ones on Amazon), so now I have four, one for each person in the family and if we need to leave the house in the event of a disaster, we have those ready to go. The backpacks include things like food, water, first aid supplies, toiletries, gloves, tools and other basics. I also got mini survival kits for the cars, just in case.
The similarities to the COVID-19 pandemic to other disasters I have experienced are stunning. Especially the runs on toilet paper, water and other essentials at grocery stores. I have never seen Costco run out of toilet paper, paper towels and water! While we all can hope for the best, I think it's important to be prepared and not be cavalier about this. A probable scenario that we are seeing in some of the hardest-hit areas of the world is a general quarantine that lasts two to three weeks (the presumed incubation period of the COVID-19 virus). In that event, it's best to have at least enough non-perishable food and basic supplies in your home to last two to three weeks, in case you need to stay home for an extended period of time. Other than that, it seems like the usual precautions for cold and flu season are also very important, including hand washing, not touching your face, staying home when you are sick, covering your mouth when you sneeze, keeping household surfaces clean and sanitary, etc.
The CDC Website is a great source of information on the COVID-19 situation and it's highly recommended. There is a lot of hysteria and "fake news" about this right now.
The financial markets have reacted with extreme volatility in the face of the COVID-19 situation and the uncertainty of the impact it will ultimately have on the US economy. I have not been too worried about my portfolio lately, because I have built a financial fortress for myself since the Great Recession and I've broadly diversified my investments across many non-correlated asset classes, I'm also very conservative in my 401(k), I have been reducing personal indebtedness, I have remained disciplined in my strategy and I have been building plenty of cash reserves. In last week's post I talked about why it's important to resist the urge to panic sell, but it's a lot easier to remain calm if you have a fortress portfolio.
Perhaps one of the "gifts" of the recent market dislocation, in addition to lower prices for good stocks and improved dividend yields for some of my favorite stocks, the rally in 10-year treasuries and corresponding yield decline has made it a great time to refinance real properties! When life gives you lemons, make lemonade!
I hope you find this post useful as you chart your personal financial course and Build a Financial Fortress in 2020.
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