We know that the stock market has been really crazy and today is just another example.
Over the last couple of months, we have had 8 out the 10 largest daily point drops ( 2,997.10 on 3/16/20 was the largest point drop). However, we have also had 5 of the biggest point gains as well (1,985 on 3/13/20 the biggest)
We know that the stock market has been really crazy, and many people have been calling asking if they should sell or hang in there, so the answer is quite easy….it depends!!
Personal financial planning starts with taking a full inventory, a personal assessment of where you are. You should be asking?
- Do I need income? How much? Is that income stream still covering all my needs?
If any of those have changed, then you probably need to reassess where you are and what’s it going to take to get back on track.
I reminded of a situation recently where one of my clients had her IRA reach $700,000 and that was always the number that she felt needed. We discussed things and I recommended selling because the risks were too great that the market could have a correction due to the uncertainty of the coronavirus. I said, “if $700k is your number, then let’s lock-in and do something to protect it!” She agreed, and we saved her over $200,000 in potential losses.
If you are worrying that further drops in the market will affect your income or current situation,
then it’s probably time to reposition. Sell into any market upswings, keep your money liquid and safe and look into strategies or solutions that will fit your needs better as we move forward.
For fixed-income needs:
Consider, strong blue-chip companies with great track records of consistent dividends,the stock price has dropped and now you are able to invest while things are on sell likemaybe oil stocks, healthcare, banks, etc. Create a diversified, higher-yielding stocksportfolio with dividends to help meet your income needs.
Consider a split annuity concept with a portion of your money going into a SinglePremium Immediate Annuity (SPIA) for income and the other portion growing in a FixedIncome Annuity for growth purposes.
Research higher-yielding corporate bonds, preferred stocks, Master Limited Partnerships(MLP’s), publicly traded REITS, UIT’s, etc. Look at management, balance sheets, track records, etc. to determine what might work for you.
An Indexed Universal Life Insurance (IUL) designed for income that can also includepotential tax benefits and guarantees that help meet your needs.
Finally, get a second opinion as we have been doing this going on 34 years, so no onehas a monopoly on good ideas
This is a time that has drawn comparisons to the Great Depression, the Spanish Flu epidemic of
1918 (where 675,000 Americans lost their lives, and the craziness of the Financial Meltdown of
2008, so you need to be taking action.
Your broker’s or advisors simply telling you to “hang in there,” “this will pass,” or “it’s being overblown,” isn’t good advice in my books! It’s time to reassess, make sure that your goals and needs being met are still intact and to even consider making any appropriate changes.
The coronavirus pandemic isn’t over, and you need to pay attention to your money,
but simply taking your lumps doesn’t sound fun, just remember how it felt in 2008? Take action if necessary or get help!!
“To sell or not to sell it’s really dependent on you and where things stand for you!”