By Jeremy Wallace and Andrew Hart
COVID-19 has been wreaking havoc across the globe for several months, and based on current surges, there’s no end in sight. The coronavirus crisis hasn’t just upended our schedules, work lives, and families, it’s also brought increased volatility, drastic market lows, and daunting unemployment numbers. Understandably, many people are still struggling financially or worried about their money—among other things.
There is so much out of your control right now, but you are not completely powerless. There are ways you can be proactive about your finances and make the most of this time. Let’s look at 4 strategies you can use today to leverage the 2020 financial crisis and grow your wealth.
1. Reevaluate And Reposition Your Finances
A financial crisis is the perfect time to go back to the drawing board and reevaluate your current financial situation. Did you realize your emergency fund is too small? Is there more risk in your portfolio than you’re comfortable with? Do you have more debt than you should?
Take a hard look at your finances to identify ways you could save money—either now or in the long run. For example, now can be an ideal time to:
- Refinance your mortgage to a lower rate. Interest rates have fallen back to a historic low. As of July 14, 2020, the average APR for a 30-year fixed-rate mortgage is 3.172%. (1) If you’re looking to cut your mortgage payment, call up your lender and see if you qualify for refinancing. Just be sure to factor in closing costs, which could eat into your savings.
- Take out a life insurance policy (or increase your current coverage). If you’re like most people, the coronavirus pandemic has you thinking a lot about life insurance. The good news is that it’s not too late to apply and lock in a low rate if you’re healthy. Life insurance rates are largely tied to interest rates and the market, so buying now while rates are low could be a good way to secure your family’s financial future. (2)
2. Limit Your Losses
If you’re looking at all the market chaos and losing sleep at night, know that we have specific rules in place so that if the markets trend below a certain point, we move to cash. This allows us to respond to market conditions and make adjustments rather than just hold on no matter what, allowing us to protect our clients’ money from staggering losses.
In other words, you don’t have to go on the market roller coaster. Instead, we’ll continue to use indicators like relative strength, supply and demand, and trendlines. We’ll continue to follow the rules we’ve put in place: getting in the markets when they trend above a certain point and getting out when they trend below a certain point.
3. Check Your Risk Tolerance
But what if you’re retiring soon and this financial crisis has made you realize you’re too heavily invested in stocks? In this case, it could be a smart move to re-check your risk tolerance and possibly adjust your investments to reflect how much volatility and risk you are willing to take.
4. Find Ways To Save On Taxes
Growing your wealth doesn’t necessarily mean making more money. One of the most efficient ways to maximize your savings is to minimize your tax burden. Fortunately, there are plenty of strategies you can use to legally reduce your tax bill, such as:
- Contribute the maximum amount to your tax-advantaged retirement and HSA accounts.
- Use deductions to reduce your taxable income and credits to reduce your tax bill.
- Consider tax-loss harvesting while you are repositioning your portfolio.
- Use charitable donations to minimize the financial impacts of required minimum distributions (RMDs).
5. Rely On A Financial Professional
It’s safe to say that just about everyone is experiencing stress of one kind or another during the 2020 financial crisis. You have enough to worry about, so consider connecting with a trusted financial advisor who can help you create a step-by-step plan for protecting and growing your wealth today, no matter the circumstances.
Wallace Hart Capital Management is a financial advisory firm that’s dedicated to helping you weather any financial storm that comes your way. Whether you need help managing your portfolio, creating a financial plan, or minimizing taxes, we’re here to help. Get started by contacting us at 859.300.3030 or requesting an appointment online today!
About Jeremy
Jeremy Wallace is founder and chief investment officer at Wallace Hart Capital Management, an independent financial services firm committed to offering comprehensive advice and customized services. Jeremy has 20 years of experience in the financial industry and is passionate about helping clients preserve and enhance their wealth so they can pursue their passions. Jeremy graduated from Emory University with a degree in international economics and a certificate in financial planning. Outside of the office, Jeremy spends most of his free time with his wife, Julie, and their three children, Isabel, Lincoln, and Reid. He is an avid Chicago Cubs baseball fan, and he enjoys golfing with his wife and traveling with his family. Learn more about Jeremy by connecting with him on LinkedIn.
About Andrew
Andrew Hart is the co-founder and chief planning strategist at Wallace Hart Capital Management, an independent financial services firm committed to offering comprehensive advice and customized services. Andrew has 15 years of experience in the financial industry and strives to provide new and better strategies and processes to improve his clients’ lives. Andrew graduated from Wittenberg University with a bachelor’s degree in business management and holds a certificate in financial planning from Georgetown University and the CERTIFIED FINANCIAL PLANNER™ designation. When he’s not working, you can find him enjoying the city of Lexington, KY and spending time with his wife, Susan, twin sons, George and Ted, and daughter, Merritt. To learn more about Andrew, connect with him on LinkedIn.
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(1) https://www.nerdwallet.com/blog/mortgages/current-interest-rates/
(2) https://www.businessinsider.com/personal-finance/life-insurance-during-global-health-crisis
7/22/2020