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March 2020. The market dropped 34% in 33 days.
That's the number everyone remembers. Here's the one nobody talks about: companies were announcing layoffs the same week. Tech, SaaS, enterprise sales teams -- pipelines froze, deals pushed to "next quarter," and the people getting let go first were often the ones with the highest commission potential. Too expensive to keep when nobody was closing.
If you're in sales, you need to understand something specific about your situation. Your income and the market don't just happen to move in the same direction. They're connected. When the economy contracts, companies cut deals. When companies cut deals, they cut reps. When you lose that job, you're not stepping into a wide-open hiring market. You're stepping into the same contraction that took your seat.
That's the setup. Here's what it means for your money.
The rep who kept his emergency fund in his brokerage account because "the S&P always goes up" -- he lost 34% in the same month his company announced a reduction in force. He needed the money. He sold at the bottom. His $30,000 became $20,000 right when he needed every dollar of it.
If that scenario sounds familiar -- not sure what you actually have, not sure if it's in the right place -- you can grab 20 minutes on my calendar. We'll look at your setup and you'll leave knowing exactly where you stand.
Two different buckets
The market goes up over 10-year, 20-year, 30-year time horizons. That's true. Your emergency fund doesn't have a 30-year time horizon. It has a 0-to-12-month time horizon. The whole point is that you can get to it immediately without losing anything.
Those are different buckets. They don't swap.
A high-yield savings account right now is paying around 4.5%. FDIC insured. Accessible same day. Not exciting. Not trying to grow. That's not its job. Its job is to be stable and available when your variable income dries up, when your company announces a RIF, when the deal you were counting on to hit quota falls apart in week 3 of Q4.
Most sales reps I work with are aggressive investors. That's right for them. They should be. But their emergency fund isn't an investment. It's insurance. Those two things require completely different accounts.
"Historically" and "right now" are not the same thing. The reps who understood that didn't figure it out because they were smart. They figured it out because they'd already been through a down quarter, a RIF announcement on a Tuesday morning, a deal that dissolved in late-stage and blew up their number for the month.
You don't have to learn it the same way. Reply to this email with "fund" and I'll send you the exact number you should have set aside given how your income is structured.
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