Investment Perspective: Items to Consider

When uncertainty abounds, our natural instinct is to do something.  We want to make a change that will improve our situation.  In investing, this inclination to act can be problematic if done based on fear rather than reason.  Below, we’ve listed several action items to consider during this turbulent time (some of these may already be in process or have been completed for you).

1. Roth Conversion – For those of you who currently have a traditional IRA, you may want to consider moving some or all of those assets to a Roth IRA.  You would pay the taxes while the account balance is lower, and then as the value recovers, the growth would be tax free.

2. Capture Losses and Rebalance – While we don’t want to convert to cash while the account balance is down, reallocating while certain funds are lower in non-retirement accounts can be advantageous.  This allows you to properly rebalance the portfolio while simultaneously “harvesting” losses that can be used this year or in subsequent years to offset capital gains.

3. Invest New Money – Although downward market movement is painful, it also presents a buying opportunity.  We don’t know where the bottom of this downturn is, but we do know that many investment vehicles are much cheaper than they were a month ago.  If you have cash that isn’t needed in the short term, now may be the time to discuss putting some of that money to work.

4. Adjust Withdrawal Strategy – For our clients who are withdrawing money on a regular basis, we’ve adjusted our strategy to pull those assets from a more conservative allocation, to allow the other investments time to recover.

5. Call Us – We want to help any way we can.  We greatly appreciate the trust you have shown us.  If you have any questions regarding the information above or anything else, please give us a call.