Okay, your portfolio is down, what now? Like most things in life, when one door closes another opens, this correction is no different. So, here are some ways to turn this market correction to your advantage.
#1: Roth Conversions
When you convert your IRA, the IRS requires that you pay income tax on the assets converted. In exchange, withdrawals from the Roth IRA are tax free during retirement. Converting your -20% portfolio translates to a 20% tax savings...so go for it!
If you were planning on gifting your kids money, consider giving them your beaten up stocks instead.
#3: Value Investing
If you have some cash on the sidelines, now is a good time to invest in a fundamental/value based strategy. Strategies that look for the "baby that was thrown out with the bath water" type companies, ie. companies that are fundamentally sound, but have gotten beaten up worse then their peers. These companies will have out-sized performance when the market does recover. (P.S. We have a great AI based strategy if you are interested.)
#4: Social Security Lump Sum Payment
If you are short on cash, and you are past full retirement age and you are delaying benefits, you may be eligible for up to 6 months of backdated benefits when you file for SS. This can represent a better option than withdrawing from your beaten up portfolio.
#5: Vacation Planning!
I know this one goes without saying. Go book that next vacation! You probably won't get a sweeter deal than over the next few weeks. Nothing like a good travel scare to slash the prices on that luxury suite. I know my wife just booked a flight for a conference later this year at a 50% discount. Just make sure to get "refundable" tickets and rooms.
As always, stay safe. Take precautions, speak to a tax professional before making any decisions and take advantage of the opportunities as they come.
If you have any questions, or if there is anything we can do, don't hesitate to ask.