The stock market crash of 1987. The tech bubble in the early-2000s. The financial crisis of 2008. And now, the coronavirus pandemic.
What do all of these things have in common? They all involve sharp market downturns that end a bull market and trigger a bear market. For many investors, these events create anxiety and worry about the long-term ramifications. These events all share something else in common. They offer potential opportunities. In a difficult time like this, it can be hard to see opportunities, but they do exist. Of course, not all opportunities are right for everyone. Your strategy and decisions should be based on your specific needs, goals, and risks. However, it’s possible that you could take action today to improve your financial future. Below are three examples of potential opportunities. A financial professional can help you determine the right course of action for your long-term strategy. Tax-Loss Harvesting If you have seen your portfolio suffer since late February, you are not alone. As recently as early February, we were still enjoying a strong economy. Between Friday, February 21, and Tuesday, March 16, the Dow Jones Industrial Average (DJIA) dropped by 35.87%. Since that low point, the market has recovered somewhat. However, the DJIA is still down 16.4% year-to-date.¹ If you are considering a change in strategy, you also may be able to take advantage of a potential tax deduction. A change in allocation may require you to sell assets that have declined in value. While realizing a loss is never a good outcome, you could qualify for a tax-loss deduction. Of course, this doesn’t mean you should realize losses simply for the tax deduction. Your decision should be guided by your long-term goals. A financial professional can help you determine how best to move forward. Roth IRA Conversion Do you hold a significant amount of retirement assets in a traditional IRA? One of the benefits of a traditional IRA is that you realize an upfront deduction for contributions. However, that also means that your future distributions are taxable as income. You may prefer to use a Roth IRA, which allows you to take tax-free withdrawals in retirement, assuming you are 59 ½ or older, and the account is at least five years old. You can convert your traditional IRA into a Roth, and now could be the time to do so. When you convert a traditional IRA to a Roth, you pay income taxes on the converted amount. If you have seen a decline in your IRA over the past couple of months, you now have a reduced balance. That means the tax exposure from conversion would be lower today than it was two months ago. It’s also possible that, like millions of Americans, you have been laid off, furloughed, or that you have accepted a pay cut. It’s possible that your income for 2020 will be lower than it has been in years past, which means you may be in a lower tax rate. Again, this could reduce your tax exposure in a Roth conversion. Roth conversions aren’t right for everyone. However, if you have been considering one, this may be the right time. Investing at Discounted Prices It’s never a good idea to try and predict the market’s direction, especially in the short-term. Investment decisions should always be guided by long-term strategy and specific goals and needs. However, there is no denying the fact that many assets are currently trading at prices substantially reduced from two months ago. If you have cash available to invest and have the risk tolerance to withstand potential volatility, this could be a good time to revisit your strategy. It’s always wise to hold six to twelve months in liquid, risk-free emergency reserves, even if those accounts pay very little in interest. However, if you have other funds that aren’t needed for emergency reserves, you may want to consider how best to use them in the long-term. Investing at discounted prices may allow you to more fully participate in a future recovery. As always, your decisions should be based on your unique needs, not generalized advice. Let’s talk about it and implement the right strategy for your goals. Contact us today at America’s Financial Center. As a CPA & Wealth Management Firm we look at all your financial needs (tax, investments, retirement, and insurance) because they are all intertwined. We can help you document your goals, clarify your risk tolerance, and create a comprehensive policy that keeps you focused on the long-term. 1https://www.google.com/search?safe=off&tbm=fin&sxsrf=ALeKk006ktaTHRuJ1MB-WYLuWkeqF7PpWw:1588177817109&q=INDEXSP:+.INX&stick=H4sIAAAAAAAAAONgecRowi3w8sc9YSntSWtOXmNU5eIKzsgvd80rySypFBLnYoOyeKW4uTj1c_UNDM0qi4t5FrHyevq5uEYEB1gp6Hn6RQAAItD1MEkAAAA&sa=X&ved=2ahUKEwjPyP-0h47pAhXIWM0KHR3mBUQQlq4CMAB6BAgBEAE&biw=1536&bih=754&dpr=1.25#scso=_N6ypXpKOEYu2tAbp-I-oAQ1:0 Article was written by Creative One through third party content creation program. Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 20050 - 2020/4/29
8 Comments
Eddie Campbell
5/26/2020 09:54:51 pm
Discuss possible options.
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Oasis of Wealth, Hunter strives to provide his investors with a stable consistent cash flow with long term appreciation. His passions for finance and architecture create projects with strong economic growth and a unique customer experience, the cornerstone for his sustained business model. His primary roles are sourcing investment opportunities and investor communications. In addition to finding and underwriting opportunities, Hunter is responsible for developing effective communication strategies to accurately explain the company’s vision and asset performance for its clients. Hunter has acquired and sold over 500 properties at an estimated total value of $98 million across North East Florida. He graduated from the University of North Florida with a Bachelor of Science Degree which led him to work with Fortune 500 companies, seasoned asset managers, and entrepreneurs. His strengths include effective communication, growth, profitability and successfully helping others achieve their version of OASIS.
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10/22/2020 02:05:14 am
However, there is no denying the fact that many assets are currently trading at prices substantially reduced from two months ago. If you have cash available to invest and have the risk tolerance to withstand potential volatility, this could be a good time to revisit your strategy.
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1/12/2021 03:15:52 am
The article has a valuable content, which has helped me a lot in understanding INVESTORS
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11/23/2020 11:37:06 pm
I do love that this post mentioned that one of the benefits of investment is that it increases our financial opportunities. I do believe during this difficult period, it is best that we look into options to increase our financial values. I will consider this option.
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1/1/2021 12:00:05 pm
Covid-19 was a major blow to both investors and companies raising capital from investment opportunities. That time was difficult for many businesses to sustain. Post pandemic era i.e. 2021, industry experts believe, will be more conducive for investors. They need to explore investment opportunities in agriculture, cannabis and fintech. One can consult a platform that deals with investors and companies needing capital to meet their requirements. To my knowledge, Investorhotseat is acting like a bridge between investors and companies seeking investments.
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1/4/2021 12:14:11 am
Thanks for the information I will try this informative and helpful article Great...I really like your article.
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1/21/2021 03:30:12 am
I liked it when you shared that it is important to do investment decisions by applying long-term strategy and specific goals and needs. It is advisable to check where your money goes by consulting the right personnel who are reliable and experienced. I would like to think if someone is thinking of investing in the industries in third world country, he should look for a reliable service that can help him do so.
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