Financial Planning in a Crisis: At Home

Echoes at Home…

It’s been another couple of weeks “at home” willing to do our part complying with the shelter-in-place order.  Then, on Tuesday we heard the decision to close all public schools for the remainder of the academic year.  Let me count… that’s another six weeks at home for the kids and an end to my son’s first year of school baseball before it ever really got started.  You likely have a very similar story.

To follow up my last post, with this extra time I’ve already been able to “learn things.”  Here are a few of them: I don’t read as much as I should, my prayer list is way too short, and we have become much too dependent on technology.  Therefore, it was a nice surprise yesterday when my daughter received – get ready for this – a hand-written note from a friend across town.  She immediately wrote her back.  Sure, there’s technology they use to get online and see each other in a much faster and “easier” way.  But it was fun to see them communicate the way we used to when I was a child – one that, dare I say, took a little more effort.

We’ve also seen other changes.  It’s been nice talking with neighbors we seldom, if at all, talked to before this pandemic.  I’ve seen the opportunity cost associated with failing to read more.  But I’m not blind to the fact that these things take time – as does prayer, or anything else worthwhile.  Given these extra-long days at home let me encourage you to “take inventory” and, perhaps, even reshuffle priorities.

In doing this myself I also came across some good advice that I wanted to share.  Each quote was like an echo from the past that helped take away any lingering emotions.  If we are honest, staying objective can be a difficult task, especially when making investment decisions.  So, while you are also “at home” maybe these timely quotes from Sir John Templeton will help you:

Sir John Templeton

  • If you begin with a prayer, you can think more clearly and make fewer mistakes.
  • An investor who has all the answers doesn’t even understand all the questions.
  • Don’t panic. The time to sell is before the crash, not after.
  • The only way to avoid mistakes is not to invest—which is the biggest mistake of all.
  • The investor who says, “This time is different,” when in fact it’s virtually a repeat of an earlier situation, has uttered among the four most costly words in the annals of investing.
  • If you do not know what you want to achieve with your life, you may not achieve much.
  • The best investment with the least risk and the greatest dividend is giving.


Client Update 4-3-20

Just an Update – Friday, April 3rd

Last week we saw two significant events happen in the market.  First, on Monday, March 23rd, the market put in a possible bottom at 2,237 (S&P 500).  Second, just 3 days after that, on Wednesday, March 26th,  we saw the market back at 2,630 (a rebound of 17%).  In the short-term don’t be surprised to see the markets go back down and re-test the lows from March 23rd.  Considering that there is more negative news on the virus to come out (more infections, more deaths, more unemployed, more companies’ quarterly earnings affected, and just the negatives of people having to shelter-in-place) the markets may not be finished with their decline.  Yes, we remain positive about markets recovering over time, but in the short-term we may still see ‘red’.

On another note, here a piece of good news.  As a part of the CARES Act signed into law on March 27th, RMDs (required minimal distributions) have been waived for traditional IRAs, SEP-IRAs, SIMPLE-IRAs, 401(k), 403(b), and 457(b) plans.  Additionally, RMDs have also been waived on non-spousal inherited IRAs for both Roth and Traditional IRAs.  For someone who has already started their RMDs (but not completed them) it is possible to simply discontinue the remaining amount through the remainder of 2020.

Additionally, here is another forgiveness that some will appreciate: for anyone who turned 70½ last year and were planning to delay their 1st RMD until April 1, 2020, that RMD is also waived.  We would suggest anyone who can reduce or stop their withdrawals this year should strongly consider this.  The benefits could be reducing income taxes as well leaving this money invested to hopefully regain some lost ground.  If you would like to reduce or stop your RMD please let us know sooner rather than later.

Also, keep in mind another piece of good news: unless you are taking withdrawals (or selling) during this time, you have not lost any shares.  That means that while your values are down, your shares are not.  So, when prices eventually do recover, you can regain your value (and possibly more if you add or reinvest during this period).

Very soon, if not already, investors all across the country will receive their March statements (including their employer 401k statements) and many will be very surprised how much their account ‘values’ have declined.  Even though they have heard how much the markets have corrected they have not calculated this affect into dollars.  Our suggestion is to not overreact and try to remain positive, not focusing too much on these quarterly/periodic statements.   Over time, as things get better, we will help you regain ground and continue your path to reaching your long-term goals.

From each of us thank you for the opportunity to serve you and walk this journey with you.  Many of you have said encouraging words and voiced prayers for us.  Please know we appreciate you and are committed to helping you through these days and look forward to the better days ahead.