Last week, the month of April came to a close (finally) with a 12.6% rise in the S&P 500 during the month. That makes it the best month since January of 1987!
However, this rebound does not mean that we’re out of the woods yet. The S&P 500 is still down 12.38% for 2020 and while it’s difficult to say what will happen for certain, we are not convinced the volatility is over. As we monitor the economy, there is high unemployment, declines in consumer spending, and billions of dollars being pumped into the economy by the government. While the economy will likely take a while to return to normal, we can expect the stock market to recover more quickly since Wall Street looks ahead to what corporate profits are expected to be 6 months from now.
The last two months show that it’s important to stay invested because those who “cash out” often miss the market’s best days. A recent study by Putnam found that those who remain invested over a 15-year period earned 9% returns while investors who missed just 10 of the best market days only earned 4.13%.
How to make the most of this market downturn
With the markets being volatile and still down overall for 2020, there are some strategies that you can deploy to make this downturn an opportunity for success.
- Re-balance your investments.
- Tax-Loss harvesting.
- Invest excess cash.
- Convert your pre-tax IRA to a Roth IRA.
- Refinance your real estate for a lower rate.
- Ensure that your beneficiary designations, wills, and trusts are up to date.
- Update your healthcare directive(s) and communicate it with your family.
We have been re-balancing accounts and helping clients deploy these strategies when prudent. If you have questions about your situation we are happy to help answer or evaluate whether it may be beneficial for you.
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