Adam Horning No Comments

Market downturns happen periodically and often times those drops can cause a fair amount of anxiety. There are, however, some planning opportunities that you might be able to take advantage of during the next downturn. Below is a list of some ideas that could be helpful.

1. Take a look at your overall asset allocation. Its possible that your bond holdings have increased relative to your stock holdings.  If you have the risk tolerance, this could be a good time to re-balance and increase your stock allocation and take advantage of the market recovery when it happens.

2. Cash is king.  Due to the uncertainty of how this will effect the economy it would be wise to increase your cash reserves.  If your cash position is low, consider reducing your debt payments to the minimum until your reserves are built back up.

3. Interest rates are low. Consider refinancing your mortgage or other debt if you can save money.

4. This could be a good buying opportunity due to stock prices being low and you have extra cash on hand.

5. If you need to take money from your investment account, look at taking from your fixed income/bond holdings. Those positions are less likely to have been affected in recent weeks when compared to stocks that are selling at a reduced value.

6. If you are close to retirement, take a close look at your budget and your liquidity to find out how many months of reserves you have on hand. 12-24 months of cash reserves or more is ideal.

7. If you have a non-qualified investment account, this could be a good time to re-position your portfolio and reduce the amount of capital gains tax you are subject to and/or take advantage of tax loss harvesting.  

8. Keep in mind that, although it feels uncomfortable, economic and market uncertainty has happened in the past and will happen again in the future. Markets have recovered from past outbreaks, and I am optimistic that we will weather this storm as well. 

As always, feel free to email or call me if you would like to chat, update on your planning or discuss current events.