The current market situation is an example of why we stress financial planning as the cornerstone of any investment decision, retirement planning, business transition strategies, etc. Studies show trying to time the market is nearly impossible and leads to substantially lower long-term returns than remaining in the market. In the short term, we can point to certain ideas and strategies you may be able to take advantage of depending on your situation.
Here are a few quick ideas to consider:
- Convert Traditional IRA accounts to Roth IRAs to maximize future tax-free growth and income distributions as the market recovers
- Increase current 401k/403b contributions to “buy low” when the market is down and increase tax-deferred growth potential
- Switch traditional 401k/403b deferrals to Roth deferrals if income this year will be lower
- Increase portfolio rebalancing frequency to maintain appropriate allocations
- Delay taking required minimum distributions until later in the year to allow accounts to recover
- Begin dollar cost averaging cash earmarked for long-term investment
- Consider refinancing your mortgage and intra-family loans
Our financial planning partner, HK Financial Services, can help in all of these areas and more. When the time is right, we should discuss strategies for your specific circumstances. If you’d like to learn more about the value of planning and our firm’s partnership with HKFS, you can watch this video.
The current market situation is an example why our firm has partnered with HK Financial Services. HKFS focuses on planning for the long-term. Because of the HKFS philosophy, when we do planning with our clients, we demonstrate many of the what-ifs in life, including market volatility. Therefore, we do not need to undo or redo our planning at the turn of a market.
As part of the planning process, we identify what’s most important to you and what the appropriate amount of risk is in helping you achieve your goals. Again, a change in markets is not cause for a directional change in your long-term plan.
HKFS has an Investment Advisory Committee who guides investing strategies. The Investment Advisory Committee considers market highs and lows. This approach results in building a plan that can withstand market fluctuations.