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A financial planner shares money tips for the rollercoaster stock market

Unemployment hits record highs as the U.S. enters a recession.

It’s been a wild ride on Wall Street as we navigate the uncertainty of the coronavirus. Local financial professional Scott Braddock joins us to explain what we should be doing with our money while we're on this stock market roller coaster.

What should we do with our money during a volatile market?

Rebalance Your Portfolio 

  • Take a look at the risk in your portfolio and consider rebalancing. Depending on performance, your risk could be out of balance. This also gives you the opportunity to buy high and sell low. 

  • To determine what percentage of your money you want to expose to risk, keep your eye on the big picture. 

  • Look at your goals, risk tolerance and when you plan on using this money for retirement. 

  • Since many investors don’t rebalance regularly, set a reminder for every six months or at least consider checking your portfolio annually. 

Roth Conversions 

  • A silver lining during this time is the benefit of making a Roth IRA conversion. During a market downturn, the process is less expensive. 

  • You will have to pay taxes on the money you convert now, but tax rates are lower due to the Tax Cuts and Jobs Act. 

  • You can withdraw your contributions at any time without paying taxes or penalties, although you will face penalties if you withdraw the gains before age 59 ½. 

  • There are no required minimum distributions with a Roth IRA. You can leave your money to grow tax-free in your Roth IRA, which gives you more control over your taxes in retirement. 

Invest Cash 

  • In challenging times, opportunities do present themselves. The upside to investing in a down market is some stocks may be cheaper. 

  • If you do have some cash on hand, now may be a good time to buy stocks at a lower price.

  • You do need to think long-term; you’ll most likely hold onto these stocks for a number of years. 

  • It could also be a good time to add dividend stocks to your portfolio. This means companies pay earnings back to the investor.

Tax Loss Harvesting 

  • The goal with tax-loss harvesting is to sell some investments at a loss to help offset the taxes you have to pay on your gains.

  • Tax-loss harvesting can only be done with taxable investment accounts. This means you can’t use losses from retirement accounts like traditional IRAs, Roth IRAs, 401(k)s and 403bs. 

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What if we need help figuring out these different strategies?

  • It’s important to sit down with a financial professional who can go over all of your options because each situation is unique.

  • Scott's first priority when meeting with clients is to understand what drives their financial decision-making. Are they a saver, speculator or investor? People view money differently, and identifying this helps me clarify their vision for retirement.

When will the recession end? 

  • On average, a recession lasts 11 months, but some are longer and some are shorter. 

  • When you compare the events of this recession to the Great Recession and the Great Depression, there are a lot of differences, causing some to believe this may be a shorter recession. 

  • Focus on what you can control like how much you are spending, saving and putting aside for retirement. 

  • If you don’t have a long-term financial plan, now is the time to meet with a financial professional who can help you set savings goals for retirement and create a plan to reach them.

  • Scott's goal is to protect clients from downside risk in the markets as they near or enter retirement; learn more about the retirement planning process on his website by clicking here.