I looked around during an airline safety briefing and was amazed at how few people were paying attention. As a pilot in command of an aircraft, I never do anything without carefully briefing the action first. When I fly as a passenger I always stop whatever important thing I am doing before take-off to pay careful attention to that safety briefing, though I have heard it many times. A plug door recently exploded off of a passenger aircraft but the people sitting around that door are alive today because they paid attention to the briefing. I believe a regular financial safety briefing is equally important, and I find the two types of briefings have a great deal in common. So, pause the very important funny cat video you are watching and pay attention!
“Keep your seat belt fastened.” People get frustrated when the pilot turns on that fasten seat belt sign as if it is a major inconvenience. Some even ignore it completely and have to be personally reminded by a cabin steward. I assure you that pilots always wear their seatbelts, and they keep them snug. Turbulence rarely hurts airplanes but if often hurts passengers who are not buckled in. Financial markets also run into occasional turbulence that can be just as invisible and unsettling as the type pilots try to avoid. A carefully thought out, and diligently followed financial plan is the seatbelt I recommend. Your written plan will help keep you in your seat while your more careless fellow travellers are being tossed around when unexpected turbulence suddenly strikes.
“Read the safety card.” I have rarely seen anyone do this except on one flight when I was seated next to a professional airline pilot. He was a passenger that day in the very airplane he normally flew. He told me he reviews the card before every flight because he wants the information to be fresh in his mind. When you invest money you should also review the available information about the various products you are investing in. If you don’t understand a product and your advisor can’t clearly explain it, why would you want to own it? You don’t need to be an expert, but you should have a basic understanding of what you invest in.
“Know where the exits are.” In an emergency, the airplane may fill with a fog or smoke, which would make it a bad time to be trying to find an exit. In a financial emergency the fog of confusion can make it difficult to think through a solution. Any good financial plan includes exit strategies. If things don’t go as expected, what is your exit plan? We should invest long-term but sometimes short-term problems call for an immediate change. Know in advance how you will get out if you need to. This is where your financial plan, like the lights on the airplane floor, will help guide you to the exits when it is difficult to see forward.
“There is a life vest under your seat.” Most market dips are just temporary turbulence but sometimes they last longer than our comfort level and require emergency action. Do you have a financial life vest and know how to use it? What will you do if things start sinking around you? Do you have enough cash in savings? Are you living with responsible debt levels? Do you have investments not correlated to the traditional stock and bond markets that may help keep you afloat while you wait for conditions to improve?
“Put on your own mask first.” In a sudden depressurization you only have a couple of seconds of useful consciousness. The oxygen mask hanging in front of you must be donned as quickly as possible. How are you going to help anyone else if you are passed out? Take care of your personal finances first. I have worked with many seniors whose finances are marginal, yet they are constantly pulling out money for loans, power bills, house payments and even vacations for their kids. You love your kids, but you cannot help them if you are financially unconscious. Secure your own finances first, then think about whether you have the reasonable capacity to help those around you.
“Sit back and enjoy the ride.” Remember that despite the occasional bout with turbulence, tens of thousands of airliners reach their destination safely every day. Aviation’s safety record in the world of travel is really unmatched. Likewise, investing markets have many short-term problems but the long-term records of the stock, bond and real estate markets, taken in their entirety, are quite remarkable. Avoid giving the occasional bumps along the way more worry than they deserve. Life is a great adventure so listen to the briefing, read the safety card, then don’t forget to enjoy the ride.
Dan Wyson, CFP® is a long running national financial columnist, author of several books and CEO/Founder of Wyson Financial/Wealth Management 375 E. Riverside Dr. St. George, UT 84790 – 435-986-9525 Securities and Advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment advisor.
