While the events of 2020 created financial nightmares for many and exposed the universal need for better financial literacy and improved personal financial management; many persons still came out of 2020 as winners. There were those who knew not to waste a good crisis, saw opportunity and started businesses that filled needs created by the pandemic. There were those who took advantage of their increased purchasing power due to low interest rates and the declining prices of securities, real estate and the like. There were those who had cash to lend via loans and bond purchases. There were those who, despite the massive job losses, kept their skills updated and moved to better paying jobs.
These people, it appears, were not only financially prepared for the economic fallout caused by the pandemic, but were also prepared for the opportunities that arose as well. Being aware of these people and opportunities reminded me of a random conversation that I had at the gym a few years back.
WORD TO THE WISE – NEVER LET AN OPPORTUNITY MEET YOU UNPREPARED
While waiting for our workout partner to arrive, a colleague and I were discussing real estate and how to get into the market. At this point I had not too long ago visited his home for the first time and was highly impressed; especially considering how humble my colleague was. Aside from the home I visited, my colleague and his wife also owned other pieces of real estate. Seeing as I had no real estate of my own, I seized the opportunity to glean from his wisdom and experience. Upon asking how he was able to obtain so much, he provided one of the best pieces of financial advice I received up to that point. He looked me in the eye, and without hesitation and with all the certainty and confidence in the world he said:
“You have to prepare! That’s All, be prepared. Plenty people want things that they aren’t prepared for, and when the opportunity comes, they can’t take advantage…. because they are not prepared! “
He went on to make the point that in one particular instance, the property he wanted to purchase was relatively inexpensive, but he had very little competition as many persons could not even provide the down payment. They were not prepared.
PREPARE FOR OPPORTUNITY
We’re always told to financially prepare for negative events: hurricanes, recessions, sudden unemployment, forced retirement, physical ailments and/or death. But, as I learned that day, it is important also to be financially prepared for positive financial opportunities as well.
And again, there is no naivety and insensitivity toward the current zeitgeist. In some instances, life will happen and has happened. And in those cases, even the financially prudent may be impacted. But for those who are prepared for the opportunities, times like the present represent just that, opportunity.
HOW TO PREPARE FOR OPPORTUNITY
So, how do financially prudent prepare for opportunities? They:
- Educate themselves on finance and market behavior in certain situations; like recessions;
- They read continually and stay on top of the trends;
- Have a plan;
- Hire a financial planner/advisor when necessary;
- Reduce unnecessary debt and expenses;
- Have cash and assets on hand for purchases/collateral;
- Have several streams of income; and
- Invest in themselves by continually learning and developing marketable skills
We all either know the stress or can imagine the stress of being unprepared to withstand financial difficulty. The feeling of regret and embarrassment, however, will be painful as well should an opportunity arise that you could have been prepared for, but weren’t.
So again, in the words of my colleague, Prepare!