What is a registered investment advisor? A Registered Investment Advisor (RIA) is an advisor or firm engaged in the investment advisory business and registered either with the Securities and Exchange Commission (SEC) or state securities authorities. LSA is an Independent RIAREAD MORE >
During the COVID-19 outbreak, it’s natural to wonder what the best course of action is when dealing with your personal savings. Here are some common questions our clients have, together with our answers as Registered Investment Advisors and Certified Financial Advisors.
Your 401k will be subject to a market downturn through this COVID 19 cycle. But remember, 401k contributions are done every payroll cycle, which means that you have bought in when the market has varied. You have effectively Dollar Cost Averaged (DCA) and have not worried about the market then, so stay the course. Right now any contributions will be at a deep discount. The absolute WORST thing to do in this market would be to go to cash.
Your investments could be in danger if they are in the wrong sector, so a review of your portfolio would be in order. We recommend having a Registered Investment Advisor review for investment portfolio during this COVID-19 outbreak. No matter the holdings, a good portfolio should have proper diversification (Ecc 11:2), to spread out your portions in order to reduce risk. An active money manager would have greater flexibility over passive investing.
This market pullback has been a direct result of the COVID 19 pandemic. All sectors have been affected, some much greater than others. Boeing was down 75% at one point and crude oil briefly traded for less than $20/barrell. What positions to hold or let go of is a great question, and one best answered by an experienced money manager. An experience investment adviser can recommend the right stocks to hold onto right now, as well as which to let go of, to help minimize your exposure and maximize returns. Each portfolio is different, so there’s no one size fits all approach here.
The coronavirus outbreak will subside because our leaders have reacted quickly to the threat and the American people have responded in kind. Progress is being made at an accelerating pace. Before the outbreak the fundamentals in our economy were very sound and experts now are telling us that we could see a market rebound as early as June.
The coronavirus outbreak should not be the only factor if you are considering putting off retirement. The single biggest benefit to this crisis is that many more people will begin to refocus on “What Matters Most” to them. Putting off retirement or perhaps taking a hybrid retirement where you work some part time may be your best plan. The timing is excellent to consult with a comprehensive financial planner to help you draft the best strategy for this next season of your life.
An emergency fund is of its greatest worth in a crisis like this. It should be separate and apart from monthly cash flow. Anyone who has not incorporated this into their financial plan will be in a difficult way right now. Three months of basic living expenses are generally sufficient savings to weather most unexpected shifts in income.