Covid Life Finances

Your experience with Covid life could range anywhere from a living hell to a cooking/exercise/Netflix bootcamp resembling the glamping equivalent of modern life. Irrespective of where you sit on that spectrum, money likely remains as a key variable in your life’s equation. Some Covid life financial observations:

The disconnect between the stock market and the economy has been more pronounced than normal (not that they were ever obliged to align in lockstep). Stalwart Canadian blue chip dividend stocks are down 18% YTD while Lululemon stock is up +36% and Peloton is up +69%…..tell me that your playbook for addressing 20% unemployment was to double down on fancy sweatpants and really nice exercise bikes.

The humble Emergency/Rainy Day fund which is a cornerstone of personal financial planning, is receiving its 15 minutes of fame as income uncertainty has shown itself to many. Meanwhile, yields on ‘High Interest’ savings accounts frequently used for holding emergency cash, now yield 0.40%. Never have people been more excited about less. Personal finance has a sense of humor sometimes. Clearly cash really is king.

Your relationship with Risk has received a tune up. How are you two doing? Acceptance and peaceful cohabitation, or delusion and betrayal? We accept risk in exchange for better than average outcomes. There is no caveat or asterisk here. That said, the risk you are enduring now is proof that outperformance is possible. If that idea makes you happy let it happen, I do. Put another way, no risk = no return. You have made a deposit with units of misery, make sure you stick around to get something in return rather than simply making a donation.

Real estate speculators have bought time with the government’s offer to defer mortgage payments until September. Some real estate investors will close on their purchases, and others…..won’t. All while some tenants will pay rent this month, “but would like your comments re: their rent obligations going forward”. Feels spicy to me. On the positive front, your mortgage rate is likely a rounding error.

Life Insurance! Thanks to a combination of competitive forces pre-Covid + quarantine living ‘stalling’ seemingly everything, Canadian insurance companies have made the move to make it easier to acquire life insurance today. Essentially you can now buy more coverage while submitting less medical evidence, and rates have not increased. I would have bet on a different outcome when combining life insurance with a global health crisis, but ‘highly variable / opposite’ seems to be a Covid theme. Not bad when there is a benefit to being wrong.