By now it’s old news that we’re in the midst of a full-blown crisis: health, economic, social…the list goes on. Change is hard on everyone, and this crisis has disrupted virtually every aspect of our lives. We are living in unprecedented times and no one can predict what will happen or what our nation’s and world’s recovery is going to look like. So I know you’re likely experiencing stress, anxiety, worry…again, the list goes on.
Although you didn’t see this coming, you are not powerless. Rather than focusing on what you cannot control during this season, let’s look at certain actions you can take to give you peace of mind now, as well as opportunities for you to improve your financial picture and make positive changes that could benefit you for years to come.
Here are 5 financial actions you can take during these turbulent times.
1. Check In With Your Advisor About Your Portfolio
Your advisor is educated about what’s going on and will be able to give you clarity on exactly what is happening to your portfolio. This is an important first step since you should feel confident that you have a well-balanced portfolio, based on your needs and your risk level.
2. Take Advantage Of Lower Prices By Maintaining Discipline
This quote by Warren Buffett is all too applicable: “Be fearful when others are greedy and greedy when others are fearful.”
In every stock market downturn, opportunities are waiting for those with the right perspective to see it. Where many people go wrong in volatile times like these is selling near the bottom of a bear market, staying on the sidelines during a good portion of the recovery, and then jumping back in closer to the next top. Put that together, and you not only lose money but also lose out on potential growth and compound interest from the time you were out of the market. Emotional investing will cost you.
It may seem counterintuitive, but keep investing consistently. When stock market prices are down, think of it as an opportunity to snap up some bargains before the recovery takes place. In the previous market crash of 2008/2009, the people who continued to invest strategically made a significant return on their investment.
3. Look Into A Roth Conversion
Market downturns are the perfect time to convert to a Roth IRA and pay significantly less in taxes, not to mention we may be at the lowest tax rates we will see in our lifetime. Let’s say you have an IRA that used to be worth $100,000 and is now worth $75,000. You could convert this position now and pay less in taxes than what you would have paid when it was worth $100,000…25% less.
There are many factors to consider when deciding if a Roth conversion is right for you, such as your current income versus your expected retirement income, your projected minimum required distributions, the tax implications, current liquidity, etc. Making this decision is something you should discuss with your advisor.
4. Look For Unique Opportunities
A few other opportunities you could take advantage of with lower interest rates and stock prices are the following:
- Consider refinancing your home.
- Purchase future travel at a discount.
- Fund a 529 for your child’s college tuition with low market prices.*
- Refinance any outstanding debt.
Are You Ready To Take Control?
It can be hard to look past this current crisis, but it’s important to keep looking ahead. When the market volatility passes (and it will), some will lose, some will break even, and some will get ahead. We at Bridgerland Financial want to see you get ahead, and we welcome the opportunity to help you make decisions that will enhance your finances so that when we come out of this crisis, we do so with more clarity and confidence—and equipped to weather any storm! Schedule an appointment online or reach out to us at firstname.lastname@example.org or (435) 535-1630.
*Investors should also consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 Plan. Any state-based benefit should be one of many appropriately weighted factors in making an investment decision. The investor should consult their financial or tax advisor before investment in any state's 529 Plan.
David Packer is founder and financial advisor at Bridgerland Financial, an independently managed financial firm in Utah. With 20 years of industry experience, David serves his clients by helping them bridge the gap between their working years and their retirement. He provides tailored, comprehensive financial plans to his business owner and individual clients so they can retire with confidence. David has a bachelor’s degree in finance and holds the Chartered Retirement Planning Counselor℠ (CRPC®) credential. Outside of the office, David loves to spend time with his wife and five kids and stay involved in his community. He currently serves on the board of directors of the Cache Valley Chamber of Commerce. He and his wife, Melonie, spent years as foster parents and eventually adopted their foster children. David loves playing and watching all kinds of sports, including officiating high school sports, and won’t turn down a good board or card game. Learn more about David by connecting with him on LinkedIn.