If the health crisis we are facing isn’t enough, perhaps
the stormy weather in the financial markets has you feeling even worse.
But when the markets are down, you have the
chance to make some moves you wouldn’t otherwise make.
Take tax losses to reduce your tax bill but
consider reinvesting the proceeds into a similar asset so as not to lose your
market exposure.
Sell poorly performing
funds you have wanted to punt that may no longer be at a tax gain and reinvest
into low-cost better performers in the same sector. Convert assets from a traditional
IRA to a Roth IRA with a lower tax bill since 100 shares of most assets today
are worth less than they were 2 months ago.
You can sit paralyzed as the markets react to
the coronavirus news or you can act on it and grab what benefits you can.
(Specific moves should consider your personal
circumstances and you should consult with your financial professional to ensure
actions are in line with your needs and tax laws.)
Larry Pike, CFA
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