We are going through an extraordinary time in our lives. The cards we’ve been dealt weren’t by our choosing, but there is a strong sense of purpose as we come together to help each other overcome these circumstances the best we can – individually, with our family, as a firm, as a community, and as a nation.
News about the pandemic and its impact keeps coming at a furious pace, and we are keeping our eye on your financial well-being. Here are number of things you should know. Please read each section when you have a moment so that you know what’s coming next.
A ROUGH QUARTER
The U.S. stock market highpoint was February 19th. That means we’ve only been experiencing the COVID-19 news and the corresponding market decline for 6 weeks. That is hard to believe as it seems much longer than that. The markets have repriced stocks anticipating a difficult path ahead – impacted by a global economic slowdown and industry specific stoppage (i.e. cruise lines, most airlines and hospitality). The result? This quarter’s stock market results, which ends today, looks like it will end as the worst quarter since 1987.
ONE MORE MONTH
We’ve suggested it will likely get worse before it gets better, and April looks to be the key month. We must all remain vigilant as the CDC guidelines have been extended through April 30. These next few weeks will reveal the magnitude of COVID-19 in the U.S. and we must all do our part to avoid the spread of the virus. Wash your hands, keep your distance, and please be extremely careful (use sanitizer wipes, etc.) when shopping and receiving deliveries at your home.
Your health and financial circumstances are of utmost importance to us. Please let us know If you experience any changes – to your personal health and/or employment situation. Congress has enacted a variety of new laws that offer assistance, and we can help you navigate the options if you let us know.
TAX PLANNING FOR 2019 & 2020
As a reminder, the 2019 tax filing deadline was extended to July 15, 2020. This includes the extension of making 2019 IRA contributions. If you are a high-income household and would like to learn more about GA Film Tax Credits for 2019, please contact us. We just learned inventory exists to purchase credits at 89 cents on the dollar with a minimum purchase of $10,000 credits (a savings of $1000 if you earn $200,000). This is a great way to save on your GA income taxes if you have excess cash.
For 2020 there will be a number of tax changes resulting from COVID-19. The most important to know right now is that Required Minimum Distributions (RMDs) have been suspended from IRA/401k plans and Inherited IRA’s. If you are older than 70-1/2 and do not need the income from your IRA, you can avoid taking your 2020 RMD and avoid paying the federal and state income taxes.
BE SMART WITH YOUR MONEY
We are all spending less (only doing what is necessary) because of the environment we are living through, but we want you to be smart with your money. You may have heard the third round of government support includes money that will be paid directly to Americans who have a social security number and who aren’t a dependent. Up to $1200 per adult + $500 per child will be issued in the coming 2-3 weeks – depending on your 2019 or 2018 adjusted gross income. If you are single and have an AGI > $99,000 you are out of luck (same for couples > $199,000).
How should you spend your money? It depends. Save it if your emergency savings is low or if your employment income is at risk. Spend it on necessary items (food, shelter, utilities) and consider paying down debts (loans, mortgages) or support your local businesses if you desire. Invest it now and “buy low” if you can contribute an extra amount into an IRA or other investment account and/or increase your salary deferral temporarily into your employer 401k.
We continue to look at portfolio opportunities to rebalance your portfolios (sell high, buy low) and tax opportunities through harvesting losses, but you can also look at refinancing your mortgage with the rates so low. Call us if you want to discuss any of these topics.
THE LONG GAME
There are a number of expressions around the phrase, “You’ve got to be in it to win it.” Some think it’s about gambling and playing the lottery. Others about life – living life to the fullest, you win some, lose some, but living a full life involves both. Investing in the stock market is similar. In the midst of this crisis, with all the market declines, did you know last week’s stock market experienced the best positive weekly returns since 1938, with the best single day increase in 87 years occurred March 24 (source: WSJ). We know these are trying times, but you have a plan and you have a solid portfolio aligned with your plan. This provides the foundation that is needed to remain a longterm investor.
WE ARE HERE FOR YOU
We are honored to work for you by providing ongoing sound advice and guidance. We remain committed to being here for you (from our homes) and helping you any way we can. As you contemplate your own financial well-being, please contact us if you aren’t comfortable or confident in achieving your goals. Your Odyssey team is here for you. We’ll get through this – taking care of each other, one day at a time.
And we are a resource for others too. Please introduce us if you hear someone express concerns about how to handle their money in these difficult times. A 15-minute call could do wonders for both their money and their well-being.
Be safe. Love one another. Let us know if you need anything.