Broker Check

April 2020 Newsletter: COVID-19 Planning Opportunities

April 09, 2020
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Dear First Mates,

I hope this email finds you safe and in good health. I’d like to focus this month’s newsletter on some COVID-19 planning opportunities. Onwards and forwards!

Consider Applying for Unemployment Insurance Benefits If Eligible
Recently, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Section 2014 of the act provides states with the ability to increase their normal unemployment insurance benefits by up to $600 per week with Federally-funded dollars, for up to 4 months. You can apply for benefits here.

Importance of Cash Reserves
COVID-19 has taught us the importance of having an emergency cash reserve. I’d recommend having 3 to 6 months of living expenses in a checking/savings account earmarked for emergencies or opportunities. I have seen individuals over the years forced to liquidate investments originally set aside for future use. For homeowners, some additional sources of emergency funds may include a reverse mortgage, cash-out refinance, home equity loan, or home equity line of credit. If you don’t have a cash reserve, consider adding this as a goal in your financial plan.

Investment Strategies
I have been quite vocal in my last two newsletters to hold your current investments and buy more if you can. If able, you can buy more by making a 2019 and (or) 2020 IRA contribution and investing those funds, adding to your brokerage account, or increasing your 401k deferral amount. Here are some other ideas worth considering now:

-This may be an optimal time to rebalance your portfolios since equities have significantly declined in value from the beginning of the year.

-The IRA contribution deadline has been postponed until July 15th, 2020

-If you were holding onto a specific security because it had low cost basis, now may be a good time to sell that security and diversify those funds.

-Consider selling some securities that have a loss in order to harvest it for tax purposes. Be careful to avoid the wash sale rule.

Revisit Your Plan
Consider analyzing your budget to see where certain costs can be cut – or to at least to provide clarity on what you really spend monthly. Some tools worth your consideration are eMoney (for my clients), Tiller Money, Mint, and YNAB.

Consider reducing and (or) temporarily reducing unrequired payments like federal student loans, mortgage/rent, and credit cards. Please speak to the appropriate institution to find out what options you have.

Since interest rates have decreased, now may be an opportune time to refinance your mortgage and (or) other debts. For those in business, the 2020 Cares Act created some relief programs worth exploring.

Lastly, the “resources” section of my website has some wonderful tools to help you update your plan.

Update Your Estate Plan
This may be a good time to review key estate documents such as your will, living will, power of attorney, healthcare proxy, and advanced directives. Unfortunately, people sometimes push this important area off for a host of reasons. In light of seeing the importance of artificial life support via ventilators, these documents can literally help keep you alive!

Check Out the Attached Pieces
The three pieces below go deeper on some of these issues. Check them out.

Relief Options

Recession Issues

Job Loss

Parting Thoughts
I keep reiterating that it is important to remain calm, that this too shall pass, and that optimism should be our only realism. I pray that this pandemic will make us wiser and stronger for the future. Personally, I try to minimize my news consumption and am using this time to:

-work on Home, Inc.
-work “on” the business vs. “in” the business
-read a book or watch that movie that I let fall by the wayside
-connect with loved ones through all this incredible technology
-and exercise more

There is a lot of information here. For any specific questions, please reach out. I’m here for you!

With gratitude,

David Warshaw, CFP®, CHFC®, CLU®