• Bridget Sullivan Mermel CFP(R) CPA

Financial Planning for Omicron: Are You Worried?

Updated: Dec 18, 2021

The Omicron variant is coming. Should you change your financial planning to adjust for the latest variant? Are you worried about your investment portfolio because of the latest news?

The stock market seems to be worried about Omicron, should you be worried about your money now?

Look. It’s not a matter of if the market is going down. At some point, the stock market will take a big dip—10, 20 or 30%. Something will happen. It could be Omicron or something else. You need to prepare.

Have some perspective. Invest in stocks for the long haul--at least 5 or 10 years. We don’t know what the market is going to be 1 or 2 years, but 10 or twenty years, history indicates the outlook is good.

Bridget thinks of the stock market like the high school hallways. Who’s in, who’s out, and where's the party this weekend? The stock market pays attention to what's going on in the short term. The latest gossip is prevalent.

When you visit a 10- or 20-year high school reunion, the conversation is quite different! There, the most well-rounded people seem to thrive.

High school minidramas are real—they’re dramatic. The feelings are real. However, in the long term, these ups and downs fade away.

Most people shouldn’t have all their money in stocks. Stocks are like crops in the field, but we have some food that's in the pantry as well. In other words, we recommend keeping 20, 40, or 60% or more of your money in safe places (depending on your age and situation.)


John: The Omicron variant has caused a lot of problems in the world. And what should you do about that with regard to your financial planning? That's what we're going to talk about in today's episode of Friends Talk Financial Planning. Hi, I'm John Scherer, and I run a fee-only financial planning practice in Middleton, Wisconsin.

Bridget: And I'm Bridget Sullivan Mermel, and I have a fee-only planning practice in Chicago, Illinois.

John: Before we get started, one thing that I wanted to mention is to remind people to hit the subscribe button. When you subscribe to our show, it helps other people find us and get this information. So go ahead and hit “subscribe.” I'll wait for a minute until you do that.

Bridget: In the meantime, I'll start asking you about the Omicron variant. John, this is all over the news, and I know that a lot of people are concerned about it. I think the stock market even went down yesterday. We're filming this at the end of November.

John: Big news, right? A couple of 3% down and the biggest thing. And so for me, there's really two things that it comes down to, and it sort of circles back to some of the basics. But the first thing I tell people to remember is: number one, it's not a matter of if the market is going to go down.

I had a conversation with the client. Is this going to be a problem? Could this cause the market to go down? The answer is yes, it sure could, but it's not a matter of if the market is going to go down. At some point, we're going to take a big dip. It's going to be down 10 or 20 or 30%. And this time it might stay down there for a year or two. Who knows? Right? This is what happens in the market.

So whether it's Omicron or taxes or inflation, something is going to happen. And so being prepared and having your investment and your overall financial planning done in a fashion that anticipates. It's not like we avoid this stuff, right? It's going to happen. Is this the one? I don't know. Maybe. But if you have yourself prepared, then it becomes less of a concerning issue when things like this do arise. That's number one is it's going to happen at some point, and then if this is the trigger it’s just much less important.

And then the other thing that I tell people is just to have some perspective on these long term. Your money that's in stocks is designed for long term. And we're talking five years and ten years, right? And it's helpful for me personally, and I have the same concern, but you look back ten years ago and twenty years ago, and where were the markets? What was the SMP at 20 years ago?

And you say, “Oh, Jeez, my money that's long term. I'm not going to touch those stocks for ten years." What's gone on back decades you can see that. And you go, “Oh, yeah.” What do you think the market is going to be? I don't know, next year maybe it's not good, but in ten years, in twenty years, are things going to be better than they are today? It's almost a guarantee. And so as you look at those things…So those are the two things that I talk with people about. What do you say when this comes up, Bridget?

Bridget: Well, you know, actually, the metaphor that I use is that I think the stock market... a lot of the operations in the stock market is kind of like the high school hallways that I grew up with. So the chatter in the hallway is really…Who's in? Who's out? Maybe some joyous basketball news. You know, what are you doing this weekend? But everybody just kind of picks up on the latest gossip and makes it overblown.

And I would say that your what's-going-to- be-happening-in-ten-years? it's kind of like, “Well, who would you bet on in ten years?” Well, I would bet on the well-balanced person, not just the person that's...the chance of the person that's, like, a one hit, one note person succeeding in ten years after high school is lower.

So the all star athlete, the chances of them making it big are lower than the people who are more well-rounded. Not that that never happens, but the person who's most popular in high school generally isn't the most popular or most successful in life. Again, not 100% of the time; we're talking about big statistics.

And anybody…I've gone to a lot of my high school reunions. It's just something I really enjoy--catching up with people--but you can see, like, okay, what you think is going to happen with people isn't what's going to happen.

John: I love that analogy. I've not heard that one before. It’s twice now you've been bringing up good analogies. But it's interesting that...I think something I gleaned from that is that when you're in high school and you have those little mini dramas, they're very real. It's not made up. It's a big deal. And then you think you go ten years down the road, you go, “Oh, yeah, that's right. I remember that thing” for most of those things, right?

Bridget: Right.

John: And so it really reflects on things today is it's very real, some of those feelings, it's not like, “Oh, no, this isn't.” But again, that longer term time horizon. And I just made me think of one other thing that I do talk with people about is that we talk about “How are things going to affect the stock market?” is that most people shouldn't have all their money in stocks, right?

In our language, through the Alliance of Comprehensive Planners, we talk about stocks being like our crops out in the field. That's where we have growth; that's also where we take risk. And then we've got our cash reserves, our bond, our bond ladder, those are the pantry items where that's a secure thing. And so, jeez, if the market goes down 30%, not all your money goes down 30%, right? We got 20 or 40 or 60% of your money in really safe places.

And it's easy to forget that when you're reading the news about the market does this and you go, yeah, but golly, maybe half your money is in things that aren't in the market, right?

Bridget: Right.

John: And so to have some perspective, again, on that and keep that in mind can be really helpful as you think about these scary times.

Bridget: Right. A well-balanced portfolio, just like a well-balanced person generally wins over the long haul. So with that, let's wrap it up. I'm Bridget Sullivan Mermel, and I have a fee-only financial planning practice in Chicago, and I'm visiting John Scherer today in Middleton, Wisconsin, at his practice.

We're both members of ACP, or the Alliance of Comprehensive Planners, where there's advisers all over the country who think and talk a lot of the same ways that John and I do.

John: So if you're interested in finding a planner, you're you can go to acplaners.org and, again, don't forget to hit “Subscribe” and with that until next time.

Bridget: Thanks.

At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.

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