The first quarter of 2020 is ending, and we have a chance to reflect on recent events. This year has already been marked by unprecedented headlines. We’ve seen the Covid-19 global health crisis disrupt everyday life and trigger a sharp economic downturn. This has coincided with an acute drawdown in the financial markets. While we have gained some back, at one point the S&P 500 index was down 35.4% off its late February high. It’s natural that these events would be unsettling for us both personally and financially. Here are three items to help provide some perspective and some practical moves for our path forward.
1. EVENTS HAPPEN
Wars, political uncertainties, shortages, epidemics, tech bubbles, mortgage meltdowns, etc., have shaken us before. We are no stranger to recessions and market selloffs. We’ve made it back in the past, and likely will do so again. Markets are indeed lower, and this may give us a buying opportunity. It might be time to ask "should some cash come off the sidelines?"
2) DOES A ROTH CONVERSION MAKE MORE SENSE NOW?
The investments in your IRA are likely down and poised for a comeback in the future. Moreover, for your IRA, you may have more time until your Required Minimum Distributions kick in (age 72 for those turning 70½ in 2020 or later), allowing more time to recoup those taxes paid. Time and growth of our investments enhance the benefits of a Roth conversion. You may have both factors on your side now.
3) HAVING A PLAN MATTERS!
Here at GBB, we believe in the importance of relevant and realistic financial planning. If you do not currently have a plan in place, now is a good time to get started. If you do have a plan in place, now may be a good time to review it. Having a plan to refer to, updating it when necessary, and using it to track your progress can give you peace-of-mind. Our planning process accounts for poor markets, and this serves as a real stress test. You’ll benefit from knowing, not only where you stand, but what you can also withstand.
Thank you for reading. These are difficult times indeed. But there is opportunity to gain perspective, execute savvy moves and revisit your plan. Please reach out to your GBB advisor if you’d like to continue this conversation.