Proactive Financial Steps to Consider and Added Perspective

March 19, 2020

As news of the coronavirus continues to dominate the headlines, we remain focused on best serving you and helping you navigate global events.  Please know we are thinking of you and pulling for the good health of your friends and family.

In our recent email communications, we provided sound and historically accurate perspective on what you do not want to do in times of market volatility. As this volatility continues, we wish to share several proactive actions for your consideration that can contribute value to your overall financial foundation and plan.  Please know that if you have accounts managed by us, we are proactively performing the relevant portfolio management items for you where appropriate.

Added perspective on current stock share price dip:

We are not partial owners of good companies/businesses (i.e. stock owners) for their share price the next day, month, or even year.  We own a diverse mix of businesses (stocks) because the economy and businesses that grow through the years can provide a solid source of rising dividend income and share price growth that has never driven a loss in the long term— keys to combating inflation during modern lifespans and the resulting multi-decade retirement periods. Patience and faith in the future are key for investors at such times.

Employer-sponsored retirement plans:

If you or a spouse have a retirement account through an employer, you may wish to consider the following actions. If you do elect to make any changes, you must do so directly as we cannot complete these on your behalf. 

  • Consider rebalancing your employer-sponsored retirement account portfolio. Bond funds have likely held up relatively well during this stock share price dip. So, to bring your accounts back to the risk allocation mix you intended, you could sell some bond funds and buy some stock funds. This can achieve the effect of selling bonds relatively high and buying stocks low.  If you are solely in a target retirement date fund (such as 2035 fund), the rebalancing occurs behind the scenes already.
  • If you are not yet reaching the permitted IRS limits, consider boosting your contribution percent if cash flow permits.

Personal account(s) / debt management:

  • To be weighed within the context of your overall financial plan, and current versus future tax bracket considerations, consider whether a pre-tax IRA conversion to a Roth IRA is of value.
  • If you are getting close to paying off a residence and/or second home mortgage, student loan, or any debt that has a relatively high interest rate, it may be timely to utilize any lower yielding money market, liquid savings, or muni bonds to achieve a full payoff or meaningful principal payment to further accelerate payoff.   

We are only a phone call away, so please call to discuss any of these ideas or questions.