The Week Ahead — How To Manage Your Finances In A Crisis

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By Michael Gold, CFP®, MBA Founder and CEO, Wealth Advisor

No one can deny that we are in the thick of things right now. Between a global pandemic, economic worries, and political uncertainty, it’s no surprise that we are seeing increased market volatility. All of this uncertainty may be causing you to wonder, “How will this affect me?” or “Will my portfolio recover?”

While the severity of these events is not to be minimized, we can battle fear and anxiety by going beyond the headlines and educating ourselves with the facts. With that in mind, here are 5 financial actions you can take during these turbulent times.

1. Rely On Your Advisor

Your Wealth Advisor is educated about what’s going on and will be able to give you clarity on exactly what is happening to your portfolio and overall financial plan. Your advisor has likely been through market turmoil before and can help provide insight and perspective into what you need to know and what planning and portfolio strategies that may capitalize on the situation.

A competent Wealth Advisor is a caring professional that is “quarterbacking” your entire financial situation to determine which planning approaches will work in coordination with tax, insurance and legal professionals in a fully integrated approach.

2. Seek Out Opportunities

As Warren Buffett aptly said: “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, compound interest, and dividends 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 the “Friends and Family Discount” we see from so many big-name department stores each year.  Declines in the overall market large or small can present an opportunity to snap up some bargains before the recovery (the sale ends) takes place. In the previous market crash of 2008/2009, the people who continued to invest strategically were rewarded handsomely on their investments.

3. Lighten Your Tax Burden

Tax-loss harvesting is the strategy of selling a security that has experienced a loss. By realizing a loss, investors can offset taxes. The sold security is usually replaced by a similar one to maintain the desired asset allocation and expected returns. With the markets hitting low points, it might be an ideal time for you to sell something and take the loss, but then buy something to participate in the market’s recovery. If you look for the opportunity to invest in something similar or rebalance, you win and have a tax deduction to use for this year and potentially even future years.

Before doing this, talk with your advisor about how much of a difference this could make on your financial plan.  If you have a Wealth Management team in place, tax-loss harvesting should be woven into the fabric in their portfolio management strategies already, and you should confirm this is in place.

4. Look Into A Roth Conversion

Market downturns can be 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 wealth advisor.

5. Consider Your Options

A few other opportunities you could take advantage of with lower interest rates and stock prices are the following:

  • Weigh the pros and cons of 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.
  • Buy a home at a discount if you are currently renting.

Are You Ready To Take Control?

When this market volatility has passed (and it will), some will lose, some will break even, and some will get ahead. At Gold Family Wealth, we want to see you get ahead, and we welcome the opportunity to help you make decisions and help enhance your finances so that when we go back to our regular routines, we do so with more clarity and confidence. To get in touch, easily schedule a complimentary consultation by calling us at (800) 303-2533 or emailing info@goldfamilywealth.com.

About Michael

Michael Gold is the founder and CEO, Wealth Advisor of Gold Family Wealth, an independent wealth management boutique, and named one of the Top 100 People in Finance. Michael has 20 years of experience in the financial industry and has a bachelor’s degree in business and economics from the State University of New York College at Oneonta, an MBA from NYU Stern School of Business, specializing in Quantitative Finance and Leadership, and his CERTIFIED FINANCIAL PLANNER™ (CFP®) credential. He serves business owners and entrepreneurs by stress-testing their financial plan to identify red flags and missed opportunities. Michael strategically outsources professionals from various fields, such as tax, insurance, retirement and trust, and estate law to collaborate on potential solutions to help position his clients to pursue their desired goals.

Michael currently lives in Westport, CT. When he’s not working, you can find him spending time with his wife, Giselle, their three children, Sebastian, Aria, and Pierce, and their dog, Charly. To learn more about Michael, connect with him on LinkedIn.

 

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Please remember that past performance may not be indicative of future results.  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 (including the investments and/or investment strategies recommended or undertaken by Gold Family Wealth, LLC), or any non-investment related content made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Gold Family Wealth, LLC.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Gold Family Wealth, LLC is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice.  A copy of the Gold Family Wealth, LLC’s current written disclosure statement discussing our advisory services and fees is available upon request. If you are an Gold Family Wealth, LLC client, please remember to contact Gold Family Wealth, LLC, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services.

Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor. Carson Partners, a division of CWM, LLC, is a nationwide partnership of advisors.”

“Top 100 Magazine selections are made utilizing proprietary software, which employs an algorithm to search a variety of online resources for industry-specific terms and key words. These resources include social media, blog posts, peer reviews, and Google indices. In addition, wealth managers must also the following criteria: 1. Registered with the SEC as a registered investment adviser or a registered investment adviser representative; 2. Not more than 1 filed complaint and never been convicted of a felony. Listing in this publication and/or award is not a guarantee of future investment success. This recognition should not be construed as an endorsement of the advisor by any client.”

“A diversified portfolio does not assure a profit or protect against loss in a declining market.”

“For a comprehensive review of your personal situation, always consult with a tax or legal advisor.”

“Converting from a traditional IRA to a Roth IRA is a taxable event

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