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3 Unique Financial Opportunities During COVID-19

May 7, 2020

3 Unique Financial Opportunities During COVID-19

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KEY TAKEAWAYS

When you can look at this current stock market crisis through the lens of opportunity, rather than fear, you can see this catastrophe for what it really is – an incredible opportunity.

In today’s video, I’m sharing with you 3 unique financial opportunities during this current crisis we’re in – the coronavirus crisis.

Click here to watch the full video or read the full video transcript below.

3 Unique Financial Opportunities During Covid-19

Most investors make the mistake of reacting to a drop in the stock market with worry, fear, panic, followed by despair and hopelessness. If you’ve ever felt this way during a recession or market downturn, congratulations – you’re a 100% normal human. The problem arises when those emotions cause us to make mistakes with our money and let fear blind our ability to see opportunity. 

The definition of courage is strength in the face of pain and the ability to do something that frightens you.

I’m going to ask you to have courage, but it will be worth it. It will help open your eyes to taking the right actions with your money during these uncertain times and taking advantage of 3 unique opportunities that will only be available while times are tough and may soon evaporate. 

Rebalance Portfolio & Rotate Into Stocks

The first obvious opportunity is rebalancing your investment portfolio and rotating money out of bonds and cash and into stocks near the bottom. When you have a diversified portfolio, there are almost always opportunities to add funds to stocks. Adding money to stocks when there’s blood in the streets can dramatically increase your long-term returns.

And don’t fall victim to the temptation to try to time the market’s bottom exactly. You’re relying on knowledge beyond your capability, and it’s a recipe for missing opportunity. A stock market bottoming process can last for a few weeks or months, and since we have already passed through the stage of panic, we are definitely in a bottoming out process right now. It’s also possible that the stock market has already bottomed, so don’t wait until it seems like the worst has passed before you add money to stocks. 

If you tend to keep more cash on hand or have a lot of savings in the bank, it’s an incredible opportunity to put that cash to work, assuming you always keep enough to cover emergencies that might come up.  So if you have lots of cash, what are you waiting for?! Dig down deep, find that courage, and get that cash to work! 

If you just have baby courage or you think this pandemic will wreak havoc on the stock market for months to come, you can always invest slowly over a period of 3,6, or 9 months, and still catch the market at a low point while gradually putting your cash to work. 

Roth Conversions

The second opportunity is one of those tried and true opportunities that should be on your radar during every market downturn – and that is Roth conversions. 

I’ve talked about the Roth aplenty in previous videos, and for good reason. Once your retirement dollars are in the Roth, it’s not taxed again. The rules allow you to convert any dollar amount from your 401k and IRA balances into a Roth, but there’s a catch. Whatever amount you convert to the Roth, you owe taxes on.

The big tax bite keeps many people from taking advantage of Roth conversions in a meaningful way, thus subjecting themselves to often substantial future tax liabilities because of future required withdrawals from non-converted IRA or 401k accounts. 

But when the value of your 401k or IRA drops because of a market downturn, you now have an opportunity to get more money into a Roth. You can now convert a bigger percentage of your IRA and 401k balances to Roth than you would have otherwise been able to when those account values were higher. 

Not sure if a Roth conversion is right for you? As a thank you to you for watching this video, I’ll run the numbers for you to help you decide if a Roth conversion makes sense for you. Just email me your age, the amount you want to convert, and your expected income for 2020, and I will run a Roth conversion calculation and help you interpret the results. 

Just send me an email – ashleym@truenorthra.com – again with your age, the amount you want to convert to Roth, and your 2020 expected income. That’s ashleym@truenorthra.com

Health Care Directives

Opportunity #3 is something that is unique to this current crisis. Market downturns never come on the heels of a health crisis, except this one. That’s got everyone thinking about those last things – death, judgement, heaven, and hell. Or at the very least a global pandemic gets us to think about our own mortality and what would happen if we became sick or died, or if a loved one became sick, hospitalized, or died during this time. 

I know this because I am probably the least prone person to hypochondriac thinking of anyone right now. If you dared me to lick a shopping cart at the grocery store right now, and you paid me enough money, there’s a good chance I’d be dumb enough to take you up on your offer. Yet, even I have thought about my own health during this pandemic and worried about my own well-being as well as wanting to protect my loved ones. 

Rather than fretting and wasting time worrying about things you can’t control – like a global pandemic, a renewed focus on your own health and mortality is an excellent opportunity to revisit your health care directives. And while you’re at it you might consider updating your estate plan as well. 

I don’t mean this in a judgmental way, but I am continuously horrified to see that time and time again, my clients have woefully outdated wills, or worse nothing at all in place. Most of our clients have a net worth size, a somewhat complicated assets or family situation, like a business that makes it worth getting your ducks in a row and having an estate plan that is well-thought out and up to date. Yet it’s a real possibility that your health care directives don’t even match with what you want your family to do if you are no longer able to make healthcare decisions for yourself. 

Save you and your family the heartache and uncertainty down the road of not having up to date directives and estate plan documents and get those in place now. If God-forbid you become sick or die from this virus, you’ll be glad you took action now!

See Opportunity

There you have it, 3 financial opportunities that are important to seriously consider during times of crisis: 

  • Rotating money into stocks
  • Roth conversions
  • And getting your estate and health care directives in place and up to date

But the opportunities don’t end there. The opportunities abound…everything from tax loss harvesting to getting unused money back into 529 plans, to suspending your IRA withdrawals for the year and plenty more…if you have the eyes to see opportunity and the heart of courage to take action in the face of uncertainty, they’re there for the taking. 

For retirement tips like this, listen to the One Minute Retirement Tip with Ashley >>> https://apple.co/2TgPCHz

THANKS FOR READING!

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Ashley Micciche of True North Retirement Advisors

Disclosure: 

The views outlined in this newsletter are those of True North Retirement Advisors (TNRA) and should not be construed as individualized or personalized investment advice. Any economic and/or performance information cited is historical and not indicative of future results. Economic forecasts set forth may not develop as predicted.

Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for a given client or portfolio.

Investing in stocks includes numerous specific risks including the fluctuation of dividend, loss of entire principal and potential illiquidity of the investment in a declining market. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond and bond mutual fund values and yields will decline as interest rates rise and bonds are subject to availability and change in price.

Any questions regarding the applicability of any specific issue discussed above should be addressed with TNRA. All information, including that used to compile charts and/or tables, is obtained from sources believed to be reliable, but TNRA has not verified its accuracy and does not guarantee its reliability.

Moreover, you should not assume that any discussion or information contained in the newsletter serves as the receipt of, or as a substitute for, personalized investment advice from TNRA or from any other investment professional. To the extent that you have any questions regarding the applicability of any specific issue discussed above to your individual situation, you are encouraged to consult with TNRA or the professional advisor of your choosing. All information, including that used to compile charts, is obtained from sources believed to be reliable, but TNRA has not verified its accuracy and does not guarantee its reliability.

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