• Matt Oberholzer

Five Opportunities in a Down Market


It’s hard to be optimistic about your financial future when all you read and see on the news is “Recession, Bear Market, Inflation” but what you should be focusing on is the opportunities right in front of you.


1. Keep Investing


When you are shopping for clothes, do you ever consider looking for items on sale? Long-term investors should be looking at everything in the market right now as “on sale.” You can purchase securities today that are 20% off what they were this time last year. Could there be a bigger sale price in the future? Maybe, but on the other hand, the price tag may go up, it could even be higher than before. When it is higher, you’ll wish you had purchased at the sale price.


2. Increase Retirement Contributions


What’s better than continuing to buy? Upping contributions. I recommend increasing contributions anytime you get a raise or promotion — but if you can, increasing your retirement contributions during a correction could pay off big time when you’re ready to transition from Monday morning meetings to Monday afternoon margaritas.


3. Tax-Loss Harvesting


Tax-loss harvesting is a strategy to lower your burden to the IRS. Selling investments at a loss can offset gains this year as well as future years. When tax-loss harvesting, be very careful to ensure you do not undermine your overall investment goals and strategy.


4. Rebalance


Volatile markets can shift portfolios away from their allocation targets. A market correction can be an excellent time to reset to those targets while minimizing realized gains (and saving some $ on taxes, see tax-loss harvesting above).


5. Roth Conversions


If you look at your investments regularly, you might be upset that your IRA is lower than last year. Now is a great opportunity to convert your pre-tax IRA contributions to a post-tax IRA (Traditional to Roth). Yes, you will have to pay taxes on the conversion, however, when portfolios are down, the taxes owed will be lower since the total conversion will be smaller, and in retirement you will avoid the required minimum distribution (RMD) rules, and you will owe less in taxes in retirement keeping more of your investment dollars.

0 views0 comments