Financially speaking, we are in unprecedented times and you may be wondering about the best way to handle the current situation.
Thinking about social distancing and quarantining can be stressful enough, the last thing you want to do now is worry about your investment portfolio, but you can be confident your LifePrint plan is working.
You’ve trusted us in the past to give you sound financial advice, and we’re certainly here for you now.
Are you wondering if this is a bad time to invest? Have you been considering dipping into your retirement funds or stock portfolio? Do you want to know what moves you should take next to protect the wealth you’ve earned?
We’re going to help you weather whatever financial changes COVID-19 brings you. Read on to learn what you need to do today.
5 Things to Do Now to Protect Your Investments
One of the most important things to remember during this time is that you’ve already taken unique action to protect yourself financially.
By working with us to develop your own unique LifePrint Plan, you have a cohesive risk management strategy in place that can help you weather even the most unpredictable storms and potential market downturns. This post will give you the advice you need to continue to protect your finances.
If you want to do whatever you can to protect your finances during COVID-19, make sure you start taking these steps today.
1. Rely on Cash First
Don’t make the mistake of dipping into your stocks because you need money. Even if you need funds for something now, it’s best to rely on your cash reserves for whatever you need.
There’s a reason why we encourage everyone to keep an emergency reserve of cash ready for use at your local bank. In times like these, you’ll want to reach into your emergency reserves and not your portfolio.
Always spend your cash before selling any of your investments. It’s always better to use your cash to buy enough time for your holdings to recover.
2. Pause Portfolio Withdrawals
If possible, stop or lower withdrawals from your portfolio if you don’t need the money right now.
The much-repeated adage that you buy low and sell high in the market is still true. There’s no point in selling something that’s already at a low point. The money you’ll get from the stock won’t be a lot, and you could be setting yourself up for more losses in the future.
Think of it this way, if you sell your stocks now you essentially make sure your losses are set in stone. The market will eventually rebound, but if you sell your stocks now you’re going to miss out on your potential gains.
Certain investments may have a lower value today, but that doesn’t mean that they’ll always stay this low. Avoid withdrawing money from your portfolio so you can realize the gains when the market rebounds.
3. Use Retirement Funds Wisely
If you’re over the age of 70 and are taking monthly required minimum distributions from your retirement accounts, we want you to pay close attention to this section.
You may want to consider waiting until around the end of the year to take the rest of your distributions or may want to transfer shares instead of selling holdings.
This ties into what we were saying in our previous point. You’re going to want to do whatever you can to avoid withdrawing any money so you can give your portfolio a little time to rebound.
Now isn’t the time to dip into any of your retirement savings. If you can wait to take the rest of your distributions, do so.
4. Consider Refinancing
Is your mortgage rate currently above 4%? If so, now may be the time to consider refinancing your mortgage.
One consequence of COVID-19 is that the housing market is at a near standstill. Mortgage rates are very low, possibly at some of the lowest rates you’ll see for quite some time.
Since rates are low, you may be able to reduce your monthly payment as well. Being able to lower your rate and monthly payments means you might be able to pause or reduce withdrawals from your retirement account.
If you want to know more about the best way to handle refinancing, we can connect you to a mortgage specialist that can help you figure out the best next steps to take.
Have you held off investing your excess cash because you thought the stock market was too high? It’s time to get off the sidelines and put that money to work for you.
If you have any extra cash available, now is a great time to invest. Just about everything is a lot less expensive now. The stock market is on sale.
You may never see prices this low again, so you should take advantage while the market is down.
Plan Your Future
The most important thing to take away from this post is that there are plenty of things you can do to protect your investments.
Rather than looking at the doom and gloom around us, focus on the silver lining and consider how you can take advantage of these unique and trying times we find ourselves in.
If you are not currently a client of ours and would like a financial second opinion on your portfolio, we’re here to help. Schedule your complimentary consultation today so we can talk about the best way to protect and grow your existing investment portfolio.