Friendly advice about the financial crisis

[PsyDr]

For the newbies: during the last financial crisis, there was a substantially increased need for psychologists. It's strange that when the economy gets worse, we are in more demand.

Old people feared for their retirements, and not having anything to give for their inheritances. Middle aged people feared for their job and station in life. Young people had trouble finding work due to the increased competition from middle aged lay offs. Disability claims skyrocketed. Suicide rates and hospitalizations increased.

It's all sad. But maybe some things to keep in mind for yourself and your patients.

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[Ollie123]

This.

Our field has many disadvantages. Demand for services not being dependent on a booming economy is definitely not one of them. That said...lots more to provoke anxiety right now than just the economy. I say as I just get out of my 2nd "OMG what do we do" remote-meeting (because no more in-person meetings) of the day with a 3rd scheduled to start in 30 minutes.

 

[WisNeuro]

Some other friendly advice. Max out your 401k/403b and your IRAs this year, and in the coming years. You'll want to hit on that big bounce that comes in the years following a bear market.

 

[Sanman]

Some other friendly advice. Max out your 401k/403b and your IRAs this year, and in the coming years. You'll want to hit on that big bounce that comes in the years following a bear market.

Shhhhhh! I just threw some money in the market Tuesday and still have a pile a of cash to invest, Panic everyone, I love a good sale!

 

[PsyDr]

If you wanna go financial.... wait until August like every other person.

Move some money into Diageo in a few months. People love drinking when they're stressed, and the Chinese think those liquor brands are premium booze.

And set a google alert for when Berkshire makes a move. Dude moved $150B out of the market prior.

 

[WisNeuro]

If you wanna go financial.... wait until August like every other person.

Move some money into Diageo in a few months. People love drinking when they're stressed, and the Chinese think those liquor brands are premium booze.

And set a google alert for when Berkshire makes a move. Dude moved $150B out of the market prior.

I'd just get whatever you pan on investing, break it into chunks and throw x amount in every couple weeks here. Folks, this is why it's important to not carry scads of debt. If you don't have that debt, you can clean up in these situations.

 

[Sanman]

I'd just get whatever you pan on investing, break it into chunks and throw x amount in every couple weeks here. Folks, this is why it's important to not carry scads of debt. If you don't have that debt, you can clean up in these situations.

I'm not much of a market timer generally. However, when it comes to my index funds, I try to throw extra chunks in during these corrections to help with dollar cost averaging.

@PsyDr, I'll have to keep an eye on Diageo and see where that goes. I don't play with too many individual stocks anymore as I am more of a Boglehead convert. However, I hold a small number of individual stocks to keep life interesting.

Berkshire has been sitting on a lot cash for a while now as well $125B or so. Curious to see what he will do now.

 

[WisNeuro]

I'm not much of a market timer, either, but I'm willing to make a big bet that within 5 years, we've gained at least 30-40% on current DOW levels.

 

[Justanothergrad]

Some other friendly advice. Max out your 401k/403b and your IRAs this year, and in the coming years. You'll want to hit on that big bounce that comes in the years following a bear market.

When there is blood on the street, buy.

 

[AbnormalPsych]

I'm right below the Roth IRA threshold for FTE salary with my day job. Will have to pause any side work to stay eligible for it in 2020. Think holding off on that extra 5-20k net side work $ this year is worth it to max out the Roth IRA right now and reap the gains later? Or just F it and max out the Traditional IRA and keep on hustlin all year?

 

[Ollie123]

Backdoor Roth an option?

 

[WisNeuro]

I'm right below the Roth IRA threshold for FTE salary with my day job. Will have to pause any side work to stay eligible for it in 2020. Think holding off on that extra 5-20k net side work $ this year is worth it to max out the Roth IRA right now and reap the gains later? Or just F it and max out the Traditional IRA and keep on hustlin all year?

I was going to suggest the backdoor, as well. Depends on if you already have money in a traditional IRA or not. Also, depends on your projected taxable income in retirement years and whatnot. In general, though, I don't think I'd pass up the 20k. Most people are going to have a mix of retirement accounts with varying tax friendliness.

 

[AbnormalPsych]

Moving forward with the side work is what I was thinking as well. There is a chance at a higher ceiling than that too.

Never been in a position for a backdoor before, will have to look at it seriously for the first time

 

[Ollie123]

Haven't done it yet (we're still well below the MAGI limit with how much we defer...maybe some day!), but its pretty straightforward and my understanding is that Fidelity/Vanguard/Schwab/whoever should be able to walk you through it.

Backdoor Roth - Bogleheads

www.bogleheads.org

Even if they fix this loophole at some point though, I'm doubtful there are any reasonable circumstances where it makes sense to turn down an extra 20k...I haven't crunched the numbers to figure out what would have to happen for this to favor the Roth (assuming you invested the surplus) but I think would necessitate entertaining some pretty wild scenarios (e.g comically gigantic increases in tax rates far beyond what even M4A would likely cost).

Guess it depends what you are doing, but my experience is also that side income begets more side income. That (in my mind) is probably worth more than any tax savings would be.

 

[AbnormalPsych]

Guess it depends what you are doing, but my experience is also that side income begets more side income. That (in my mind) is probably worth more than any tax savings would be.

Indeed!

I'm with vanguard so I imagine it will be pretty straightforward to do backdoor. WCI seems to have lots of instructional tools as well.

 

[AbnormalPsych]

If you wanna go financial.... wait until August like every other person.

Move some money into Diageo in a few months. People love drinking when they're stressed, and the Chinese think those liquor brands are premium booze.

And set a google alert for when Berkshire makes a move. Dude moved $150B out of the market prior.

Demand for Alcohol Strong Amid COVID-19 Outbreak

Market has not seen major disruptions due to coronavirus, Cowen report shows

www.cspdailynews.com

This is my favorite quote from the article below: "The desire to get drunk during a deadly pandemic is fairly reasonable. Kenneth Skale, president of the Los Angeles County Psychological Association, said...”"

What to Do if You're Drinking More Alcohol During COVID-19 Self-Isolation

No one is saying you can’t kill a six-pack while you’re stuck at home because of COVID-19, but you might want to pay attention to self-moderation, too.

www.vice.com

 

[WisNeuro]

The last recession was hard on research oriented academics. Funding sources dried up.

Will definitely happen again, in general. The federal government is absolutely hemorrhaging money. They were before the pandemic as the tax cut package did not lead to increased revenue as thought/promised/lied about. But, I would actually imagine if you are an academic studying infectious disease, you're about to see a lot more grant money available.

 

[AbnormalPsych]

One of the reasons I left academia. That scramble for $ that is in so many ways out of your control.

I am making the call to frontload my every other week investment contributions for the year right now and ride this thing all the way down.

 

[calimich]

I am making the call to frontload my every other week investment contributions for the year right now and ride this thing all the way down.

Wife and I also did the same this week. Put in a little extra cash up front and upped our 2x/month contribution. We will get through this. It might take a year. There will likely be permanent changes to society, and 10+ years from now I think we’ll be glad we bought on the way down.

 

[AbnormalPsych]

Yep. Its the long game. Times like this I am glad I have way too many years to count until retirement. Lots of time for these investments to pay off.