Everyone is freaked out, but you can help yourself

You might be considering selling your investments due to all the volatility the past several weeks.

It’s easy to say to ourselves, “I KNEW I SHOULD HAVE SOLD!” because hindsight is always 20/20. But the truth is, we didn’t know because we can’t know. No one knew. That’s truly the toughest part of our job. We live, eat and breathe this stuff and we are continually surprised. Remember when we were surprised when 2019 returned 30%? Surprising!

We’ve been saying it will be something totally unexpected to impact our markets. We think the Coronavirus fits the bill. What a shock.

We used to think the Dow moving 500 points in one day was significant — now it’s moving in 1,000 to 3,000-point chunks. Hard to believe.

It’s OK to be fearful. It would be unnatural if you weren’t at least a little afraid of what’s to come. So, let’s explore what you can do today!

1. Tax-Loss Harvesting

You may have investments in your “taxable” account that have lost money.  Now might be an opportune time to change investments while triggering tax losses.

2. Rebalance Your Portfolio

During market swings, a 60% stock portfolio can easily become 50% allocation.  If you feel comfortable reducing your bond position, you may move bonds to stocks to rebalance your investments.   Rebalancing may be your opportunity to follow the age-old advice of buy-low, sell-high.

3. Convert Your IRA

The best time to convert your IRA to a Roth IRA is when the market is low because you are potentially getting more future bang for your buck.  Also, you may be able to liquidate some of your taxable account at tax-neutral or better rates to pay the taxes. In other words, you may increase the value of the conversion.

4. Front Load IRA And 401(K) Accounts

Consider funding your IRA/Roth now. You may do the same with your 401(k).  It could be a great opportunity to take advantage of the current market.

5. Put Some Cash To Work

If you are sitting on cash, now may be a good time to consider investing it. It may be a little early — nobody knows — but the question isn’t where the next 10% move is going to be but where the next 100% move is going to be. We are pretty confident the answer is soon.

6. Children / Grandchildren / Beneficiaries

If you plan on passing on funds to children/grandchildren or other beneficiaries, now might be a good time to setup their accounts.  Contributing to a Roth IRA for young people could be a great time to teach them to invest when everyone is panicking and reward them for working.  Also, if your beneficiary has a Uniform Gift to Minors Account (UGMA), this might be a good time to liquidate this account to reduce the taxes.


Kelly Wood & Eric Tarver

(208) 343-2001