Rational Approaches to Financially Mitigating COVID-19: Review of Stay-at-Home Budgets, the CARE Act, and Avoiding Rash Decisions

My name is Wesley Lentz, one of the partners here at The Wiser Financial Group. On behalf of myself and the team here at Wiser, we pray and hope that you are healthy, safe, and staying strong during this crisis. Personally, I have seven people living in my house right now, and it certainly has been challenging the last few weeks. For my sanity and your sanity, I hope the good times with your family continue to outweigh the bad moments with your family.

One of the other items we wanted to bring to your attention today is just a reflection on some of the conversations we have had with clients over the last few weeks. These are very uncertain times, and we understand that many are worried about their financial security at this point in time.

We have been at this a long time here at The Wiser Group, and one of the items that impacts a person’s long term financial success are our emotions and the feeling of loss of control.

One of the general themes we have had during our conversations with clients is that we need to, please, we should all do our best to avoid making rash decisions. If you have an asset allocation model that we have had you in for a long term plan, generally speaking, the advice is we should stay the course, and maintain that model. However, every individual is different, and perhaps your advisor has made decisions in that investment model to lower equity exposure. But during these conversations, it’s become very aware to us as advisors, that most of us, whether by choice or government order, simply are not spending as much money as we used to. We are not traveling. We are not going on vacation. We are not sitting at our favorite restaurant, having a great dinner.

If you find yourself in this position, wake up and realize you are not spending as much money as you used to each month, then one of the most proactive things you can do as an investor is, in times like this, is stop or reduce the amount of money you are taking from your investment accounts. Take a look at your budget, if you have the ability to do this, reach out to us and let us know. This is probably one of the most proactive things an investor can do on their own, that he has control over, that she has control over. It’s a very bright thing to do at this moment in time.

One of the other conversations we have had with our clients revolves around the legislation that was signed by President Trump. It is known as the CARE Act. Obviously, it’s our governments’ attempt to throw a boat load of money; that is what they perceive as the problem. We will let the historians write about if this ends up being a government boondoggle, or if it is actually effective in tackling the issue that lies before us. However, one of the items in the CARE ACT, relates to your IRA accounts and the mandatory required distributions that many of you have to make each year. For the year, 2020, that requirement is being waved. You are not required to take any money out of your IRA in the year 2020.

If you haven’t taken any money out yet, please try to have the discipline to continue that. Perhaps, for the remainder of this year. If you have taken it out within the last 60 days, you have the ability to put that money back in your IRA, under a 60 Day rollover rule. Who knows, maybe you sold your position when the market was higher to take that RMD, and you may have the opportunity to put that money back to work at much lower prices.

Again, take a look at your budget, give us a call, and let us know if these are some changes you can make at this point in time.

The final thing we want to bring to your attention is the average advisor here at The Wiser Financial Group, has been in the industry for more than 25 years. What that means is that we were in the business during 2002, the tech bubble. We were in business during 2008, 2009, the financial crisis. While we have no ability to predict the high’s of the markets, and the low’s of the markets, one thing I can tell you as a fact, is that all bear markets end and new bull markets start. It’s our opinion that this will happen again.

In closing, we wish all of you the best. We are here to answer any questions you may have concerning your financial security. Please don’t hesitate to reach out to one of your advisors. One of your advisors will be happy to come up with a plan for your particular situation at this point in time.

From our entire team at The Wiser Financial Group, stay safe, stay healthy and know we are here for your during these times.

Thank you!

Wesley

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Wiser Financial Group is not affiliated with Kestra IS or Kestra AS.