Financial Advice During a Crisis

Financial Advice During a Crisis

March 02, 2022

Covid-19 has highlighted the importance of developing long-term business, financial and legal strategies that can provide a plan of action for even the most unprecedented times. What's more, the Russia-Ukraine conflict has only escalated the effects on stocks in the U.S and throughout the world. Here's how to best navigate and safeguard your money and retirement outlook amid a financial crisis. 

As we enter month three of 2022, many of us are still adapting to the constant COVID-19 changes. The recent Omicron Variant sent stocks plunging to their worst Black Friday since 1931. With all of these changes constantly happening, how can we covid proof our financial security?

Here's a look at some financial advice to follow during a health crisis like COVID-19.

Covid Effects on The Economy

Thanks to the effects that COVID-19 is having on the U.S. economy, there’s an incentive to move money into a lower tax environment. Before the pandemic, there was already great concern about the federal debt, which was $22.8 trillion at the end of 2019. With the help of coronavirus relief spending and stimulus programs, the national debt now tops $26.5 trillion and is expected to grow.

The U.S. federal government was already facing the need to deal with the increase in budget deficits and the national debt that occurred as a result of the battle against COVID-19.

COVID-19 has added more of an incentive to contributing to retirement IRAs such as a Roth IRA. Consider the stimulus spending that happened last year, tax rates were low and were not likely to last. If you want to be in charge of how much money you’ll have in retirement, a good move is to get as much money as possible into tax-free accounts now. 

The Russia-Ukraine War

As we all know COVID is no longer the main threat to the financial market with the war with Russia and Ukraine. The current, limited conflict has already increased turmoil in world financial markets and given support to agents and advisors who have encouraged clients to use non-variable annuities, universal life insurance, direct investments in bonds and other products designed to buffer the holder against volatility. In the medium term, the conflict could lead to enormous retirement planning complications for Russian citizen clients who live in the United States, U.S. citizen clients who live in Russia, Ukraine or other affected jurisdictions, and any U.S. citizen clients, anywhere in the world, who are married to spouses from Russia or other affected jurisdictions who are not U.S. citizens.

Sanctions imposed on Russian banks mean that clients may have trouble with everything from paying routine bills to getting the information needed to file tax returns. Americans who had planned to rely mainly on accounts in Russia to pay to retire there may suddenly have to look at what resources might be available to help them for retirement elsewhere.

Fresh Volatility to the Stock Market

The overall market has recently been reactive to inflation at a 40-year high, rising interest rates, the ongoing pandemic, and now, the devastating situation in Ukraine. This has only highlighted the fact that investors shouldn't panic sell amid a crisis. If you did sell your investments off last week for instance, you would have lost to the market today.

We can’t predict if the market is going to crash because it’s already based on all publicly available knowledge. So while it's human nature to act on emotion and the news we watch on TV, remember, the markets have more than doubled since the beginning of the COVID-19 pandemic when we saw the market drop over 30% in March 2020. 

Generally speaking, stay the course, stick to your plan, continue to buy and always speak with your Fiduciary Financial Advisor before making such decisions. 

Future-Proof Your Retirement

Don't let the volatile stock market from COVID and war rattle your retirement savings plan.

Volatility is uncomfortable, especially as a retiree. For small investors, whose biggest exposure to the stock market is usually their retirement account holdings — 401(k), 403(b), 457 plans, the federal government’s Thrift Savings Plan, and Individual Retirement Accounts (IRAs). No one wants to go through watching their account balances fluctuate. However, it is part of the saving and investing process. Think of your assets separately. Money for now, money for a specific future need, and money for later, ten years or more.

Secondly, adjusting your current plan and asset allocation is a great duscussion to have with your Fiduciary advisor. By looking at how your overall retirement funds are invested, we can make necessary changes to keep your plan on track. Keeping a specific amount in cash to help ride out market fluctuations is extremely important, so always make sure your emergency fund is topped up.

It's important to understand that some strategies can be more complicated than others. Sometimes certain strategies are better suited to certain individuals or families, so it pays to think this through. Remember, that with all strategies there is no one size fits all. Regardless of the direction you’d like to consider, it’s a good idea to talk with your trusted financial advisor who can analyze the pros and cons of all the options with you.

See How We Can Help

With the Russia-Ukraine conflict and the seemingly never-ending pandemic, investors are understandably nervous, and stocks are volatile. If you’re feeling stressed during these challenging times, and you’re looking for something you can control, this is it. At Agemy Financial Strategies, our first priority is helping you take care of yourself and your family. We want to learn more about your personal situation, identify your dreams and goals, and provide you with the highest level of service.

Working with the advisors at Agemy Financial Strategies can help you get ready for sinking markets—and stay grounded when they show up. We can explain ways to rebalance and help protect your accounts moving forward and even suggest a few investments we might consider making while the markets ware down. Creating a retirement checklist with us is a great way to pinpoint your main goals, compare them to retirement realities and make a plan of how to connect the two.

Click here to instantly book the day and time you'd like to connect with us for your complimentary 30 minute consultation. Our financial advisors in Guildford, CT and Denver, CO are looking forward to speaking with you.