Linda P. Erickson, CFP®, is the president of Erickson Advisors and a registered principal offering securities and advisory services through Cetera Advisor Networks, LLC. Contact her at 336-274-9403. email@example.com.
This is a most unusual summer. I believe we would all agree that many of our normal and usual concerns have been replaced by new concerns and maybe even new interests. Financial concerns may not be too different than in our pre-COVID days, but let’s review a few perennially and currently impactful ways in which we can “Cope with COVID.”
- Take the long view. If you have wisely put your cash flow needs for the next year into a savings or checking account, congratulate yourself on good advance planning in any environment, but especially this one.
- Examine your asset allocation, or where you have your investments placed, such as bonds, stocks, and cash. While this is best reviewed with a financial professional, a quick DIY review may be in order. If you are taking income from an invested portfolio such as an IRA Rollover account, keep at least three years in cash and high grade bonds or bond funds. The rest you can keep invested in your choice of equities or stock mutual funds. This will be the “long term” portion of your portfolio.
- Don’t take withdrawals if they are not needed. Don’t sell when your account may be down. If you are subject to the Required Minimum Distribution in normal times, you are NOT required to take that RMD out of your IRA or retirement plan account this year. The CARES Act relieved us of the burden of selling in an unprecedented market correction year.
- Carefully consider family requests for a loan or other assistance. Most often a loan eventually turns into a gift, so be sure you don’t need the money you will give to that family member or friend. Particularly in an economy which is recording the highest unemployment since the Depression in the 1930’s, our generous instincts will be to assist where we can. If you know you will need the loan returned in the near future, carefully consider before you act.
- Charities and Churches are always in need of our generosity, but this year I have observed unprecedented need. Of course, continue to support your favorite charities, but, again, carefully consider new appeals. Consider for two reasons: Can you afford to make this contribution? And do you know this particular organization or source of appeal well enough to be sure your money is going to the intended recipient in need? Unfortunately, extreme conditions such we are experiencing bring out the scammers and fraudsters. You can check for many types of scams at usa.gov/common-scams-frauds, particularly fake charity scams. This site has some very timely do’s and don’ts related to fraudulent scams.
When you are feeling financially vulnerable you are well advised to think twice (or maybe more) before taking what might be an ill advised action. In what is likely to be a very different economic environment than the past ten years, consider all financial decisions carefully and never quickly. Where appropriate, seek out a second opinion from a credentialed financial professional.