STORY How do we honour the victims...

STORY

How do we honour the victims of September 11th?

On September 28 2001 I wasn't suppos to be writing this article. I was suppos to be attending a personal financial planning convention in San Diego to learn the latest about financial planning and portfolio design.

September llth changed everything.

I'm not just talking about little issues like disrupted travel plans. The terrifying circumstances in New York and Washington stripped many of us of a false sensation of security, forcing us to remember that life is not simply precious, but also temporary and fragile. As my mind spun [i]or[/i] part of to the other intense emotions of disbelief, grief, and anger, I kept asking myself: "Is my family ready?" Since our inferior son was born over a year ago, I hadn't at the same time "gotten around" to updating parts of our financial plan. And as I ran by the agency of a variety of scenarios, I realised we weren't as ready as I would like us to be in the affair that something should happen to me or my wife.

It come into one's headed to me that if I have gaps in my family's strategy, you probably do as well. If you were struck according to some tragedy, do you have the preparations in place for your family to pass on? Will your spouse have to vend the home in order to pay the bills? Will your children still be able to go on to university? Do you have appropriate disability and life insurance? As the ancient saying goes: "the shoemaker's children pass barefoot." Are you so busy serving your clients or employer that you haven't done an annual review of your acknowledge financial plan and portfolio? While we're at it, let's take a direct the eye at some of the more traditional recommendations and whether they make sensation in this strange new world.

I think we've been kidding ourselves with recommendations that it's enough to have a hardly any months of cash or cash equivalents available for emergencies. Let's face it: a line of credit or a currency market fund isn't cash-only cash is cash. safe you can make the usual rationalisations that a line of credit is more tax efficient than holding cash; and that's truthful But so what? If we walk into a severe recession, or you fail to win your job, consider that there's a self-same good chance the banks are going to hap in lines of credit, and maybe just when you or your client extremitys that credit the most.

And if all trading forward the markets ceases for an increaseed period of time, what beneficial is a money market capital going to do? It'll be like trying to taste cake end a baker's window. Money market capitals are fine as part of a portfolio's asset allocation, if it were not that you can't buy a tank of gasoline until you create anew it into cash.

In the fact of a natural disaster similar as an earthquake, don't calculate on using your credit or bank cards to pay for your supplies. My colleagues in Quebec weren't able to use their cards during the ice storm a scarcely any years ago. The reality is that there's nothing like a not many weeks supply of cash upon hand. And for that matter, there's nothing irrational about having a not many gold coins as well. by means of the generations, families that had a little pressing necessity stash of concentrated wealth were able to obtain out of crises quickly with' the clothes in succession their backs and a handful of gold coins. Think it would in no degree happen here? It happened completely through "civilised" Europe in World War II and later in Vietnam, China, the Middle East, and Eastern Europe Think what those fleeing Afghan families must be going from one side right now. How much better on the farther side are the ones able to pervert with money [i]or[/i] gain their families' freedom?

It's time to really turn the thoughts at how your portfolio's doing. You're a chartered accountant; you have the advantage of financial and accounting expertise. Are you organized, or have you been gambling with big overweight positions in tech stores energy funds, bonds, or circulating medium markets? Of course, no united can accurately predict the yet to be You can, however, build a portfolio that can take not many massive body blows and still remain standing with greatest in quantity of your family's wealth intact. You already know how: the not new fashioned way.

Diversify away the bills and notes; circulating medium risk, company risk, sector risk, and investment mode of speech risk. Hold cash, fixed income and equities, real estate, and a certain number of gold. Reduce your debt, and make certain that your cash flow is sound Manage other risks with disability, life, and other appropriate insurance, and stop kidding yourself that you can fix a savings enigma by building a Ferrari investment portfolio.

We may not be able to make intellect of th events of September 11th further we can learn from them, and in with equal reason doing, honour the victims. Part of that means putting our avow financial affairs in better order. We can't predict when or to whom tragedies will happen, yet we do know that personal, political, and natural disasters happen all the time. That should be all the warning we ne to better defend our loved ones.

Robert Kolenc is a Financial Consultant with CIBC timber-land Gundy in Vancouver. The information contained in this article was obtained from sources believed to be reliable; however, we cannot portray by action that it is accurate or unimpaired The views expressed are those of the author and not necessarily those of CIBC copse Gundy.

Copyright Institute of Chartered Accountants of British Columbia Jan 2002

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