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Yikes, I opened my Q1 investment account statements, now what do I do?


It seems like an eternity since the Coronavirus stay-at-home orders were put into place. So much terrible news day after day. There is no point to reviewing it all again since we have ALL lived it – some more acutely than others. We all want this nightmare to end and get back to our normal way of life. Times of crisis sure make you appreciate what we have don’t they. But a time of crisis is also a great opportunity to grow, to learn, and to make things better in your life, especially when we are free again. But, we have a ways to go before we get there. So, where do we go from here? What can you be focusing on to help in some key areas of your financial life?

  • Investments – The financial markets have finally simmered down a bit. The initial declines were fast and scary. It seemed like the stock market and oil prices were in a free fall and they were. And, there could certainly be more volatility in the coming months as the tug-of-war goes on between the health community and those wanting the economy to open back up. Remember, volatility in the stock market is a reflection of how people are feeling and what they see in the future – some say in the next three to six months. The good news is the stock market has recovered about half of its 32% decline since the March 23rd low. Similar story for international stocks, but, not quite the snapback. So, your Q1 investment account statements likely do not reflect the full bounce we got from the low point. The lesson learned for all of us is not to panic during a crisis and sell. Instead, maybe just don’t open your account statements for a time until the dust settles.

But, you might want to start thinking about rebalancing your portfolio. If bonds have gone up in value and stocks have dropped, perhaps it’s time to sell the asset that that has appreciated (bonds) and buy the asset that is on sale (stocks) to get your portfolio back to the correct overall balance. The sale is no longer a 32% discount, but, 16% still ain’t bad. Rebalancing should be part of a regular maintenance plan for any healthy portfolio.

  • Tax Planning – As things settle down though it might be a very good time to assess your holdings. First, see if you can harvest some of those losses in your taxable accounts. These losses can be used to offset future gains when things turn around and they can be carried indefinitely into the future.

Another strategy to reduce your tax liability is to suspend your required minimum distribution this year which was passed under the Cares Act. Since the RMD for 2020 was based on your account value of your IRA account on 12/31/19 (the high point of the market) this could be a significant tax savings provided you don’t need the money for living expenses or something else. But, on the flipside, remember tax rates are historically low so you still might want to pull the money out of the IRA. Where tax rates go from here is anybody’s guess, but, if I were a betting man, I would guess higher as the government grapples with how to pay for all the free stimulus money it is doling out.

You can also convert some of your IRA to a Roth instead of taking the RMD this year to experience future tax free growth and withdrawals and no future RMD requirements. And, you can still use the QCD (qualified charitable contribution) to donate money to charities from your IRA account tax-free.

  • Financial Plan – Revisit your financial plan to see if you need to make any adjustments since the market has dropped or since there has been some other negative impact to your life due to the Coronavirus. Most of our client plans were in the optimal target range before the virus hit and will still be one month later. But, every situation is different and some require more attention than others. It might be time to adjust spending or consider future inflation and review the impact before it’s too late to do anything about it.
  • Insurance Coverages – Use some of your free time to review your coverages to make sure they are still appropriate to cover the risks in your life. Is your life insurance coverage appropriate or is it time to beef up your coverage? Does your liability coverage cover the value of your assets if someone is injured on your watch? Have you been meaning to shop around for automobile or homeowners coverage for years but never got around to it?
  • Estate Planning – if you don’t have a will, power of attorney, or medical directives in place, there is no time like the present. Think about how you want your assets to pass to your heirs. You might even have some conversations around the topic with your kids. And, while you’re at it, talk about what comes next if you no longer want to stay at home or what happens when you can’t any longer.


These are just a few areas we would urge you to evaluate in light of recent events. Now is not the time to freeze. Instead it’s a time to take stock of your situation, make sensible changes, and put your financial situation in a better place. From a crisis to action can help you regain a sense of calm as the world seems to be falling apart around you. We are here to help – feel free to lean on us if you need us!



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