Very obviously, we are not health care professionals. Take medical advice only from qualified medical professionals who know you personally. Medical information from the internet may not be applicable to your personal situation. Verify that the information you’re getting is genuine. News outlets that you’re familiar with or federal and state governments are far more trustworthy than unverifiable Facebook, Twitter, or other social media accounts. Here is a link to the Centers for Disease Control’s Coronavirus website. https://www.cdc.gov/coronavirus/2019-ncov/cases-in-us.html
The suggestions that bona fide medical professionals have been making bear repeating:
- Don’t panic.
- Wash your hands frequently. Avoid touching your face. Cough or sneeze into an elbow.
- Don’t feel put off if other people choose not to shake hands, hug, or kiss as a greeting, or if they choose to use hand sanitizer after shaking your hand.
- Call your doctor if you feel sick. Showing up unannounced puts additional burden on the healthcare system. But, of course, if you have an emergency go.
- Remember that the virus is more dangerous to older people. It’s important to keep them safe. One key way to keep older people safe is to reduce transmission among younger people who may never know they have the virus because they may not show symptoms.
- Avoid crowds and poorly ventilated spaces. Limit transportation to or through areas where the infection is active. Johns Hopkins University has a website: https://coronavirus.jhu.edu/map.html that tracks active and recovered cases.
- Don’t panic.
There are a few financial steps you might consider taking at this time:
- Look at refinancing your mortgage or other debt. Interest rates have dropped dramatically. It is worth investigating to see if you can lower your interest payments.
- Consider using a second mortgage or home equity line of credit to make needed repairs or improvements.
- Consider tax loss harvesting. In a taxable investment account selling allows you to realize a loss which can be used to offset a capital gain or even decrease your taxable income.
- Convert a Traditional IRA account to Roth IRA. With asset prices lower, a conversion will cause a smaller tax burden than it would have a few weeks ago, and the long-term benefits of the conversion may outweigh the current tax consequences.
- Consider buying real estate. If you were looking to get out of a rental and into home ownership, the monthly cost of purchasing a home will be lower because of the low interest rate.
- Consider selling real estate. This may sound counterintuitive but as interest rates for mortgages go down, the price that buyers are willing to pay can go up and the buyer can still end up with a lower monthly payment. Obviously, there are many considerations when choosing to buy or sell.
- Max out your 401(k) early. Since prices are down, putting more money to work now makes sense. Prices certainly can decrease further, but patient long-term investors are likely to be rewarded by buying when prices are down.
- Beware of identity theft. Malicious software can be included as attachments to emails and titled “Coronavirus update” or the like, just as easily as they were once titled “Your rich relative in Nigeria”. Use caution. If in doubt, don’t open attachments from anyone you don’t know.
- Beware of investment scam artists. In times of stress peddlers of gold coins (with enormous trading costs) come out of the woodwork. Also remember that the things that do best when the market declines, generally don’t to best in a recovery.
- Warren Buffet’s advice remains as true now as it ever was, “Be fearful when others are greedy and greedy when others are fearful.” Many of us think we would invest more if prices go down, but it’s harder in practice than in theory.
- We have survived two approximately 20% declines in the market (as defined by the S&P500) over the past four years, in 2015-2016 and in 2018. Each time patient investors have been rewarded.
Finally, we have new capability to hold account review meetings by video conference. We use a program called Microsoft Teams that will work on your computer or smartphone and will allow us to share reports or other documents with you on the screen. If you’re feeling ill or just might prefer to stay home, feel free to let us know that you’d prefer this option.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. All investing involves risk including the possible loss of principal. No strategy assures success or protects against loss.
