Financial Tips for Navigating COVID-19 and a Market Downturn

In the midst of the COVID-19 pandemic, CWM continues to be here as a resource for our clients. We’re sharing some counsel based on the questions we’ve been hearing from folks who are seeking a second opinion; our own loved ones, and those of clients; and others in our network who want to be proactive in managing their financial health.

It’s no understatement to say that the COVID-19 pandemic has upended all of our lives. Executives are navigating strategies for preserving and supporting staff; business owners are unsure if their companies will remain afloat for the long term; and parents of school-aged children are now juggling the duties of homeschooling while working full-time from home. Far beyond the borders of Washington state, our friends and family across the country and around the world are doing their best to adjust to this “new normal.”

In the midst of these changes, CWM continues to be here as a resource for our clients. We’re sharing some counsel based on the questions we’ve been hearing from folks who are seeking a second opinion; our own loved ones, and those of clients; and others in our network who want to be proactive in managing their financial health.

Q: I’m retired or nearing retirement. What can I do to protect myself financially?

A: As you approach retirement — or if you are already retired—it is imperative that you do not let greed take over and attempt to capture every bit of upside in the market.

That requires having the discipline to appropriately value risk – and importantly, avoid undervaluing risk. To help reduce your portfolio’s risk, work with your financial planning team to determine your required real rate of return, and you can then balance your portfolio’s ratio of stocks to bonds accordingly.

For instance, before the recent selloff, we witnessed the longest bull market in U.S. history, with some of the highest stock valuations ever seen and the lowest unemployment rate since the 1960s. When the market was at an all-time high in 2019, CWM shifted to a conservative positioning for our risk-managed clients, investing 70% of their portfolios in money market funds and 30% in bonds. Our predictions of a downturn have since come to fruition—and we see this as an opportunity, as opposed to a loss.

Q: I am still in the stage of building my career and my portfolio. Should I be worried?

A: If you are in the accumulation stage, there’s no need to panic— you’re still in a prime position to continue building up your foundation. Remember not to lock in your losses; if you are able to invest more money into your portfolio now, you can ultimately increase your buying power while values are low. If you don’t have the reserves to expand your portfolio, consider increasing your contribution to your retirement account, if you can afford it. Giving a little more now will make a world of difference in the long-term.

After a significant market correction like the one we’re currently experiencing, investors may be hesitant to invest in the stock market anytime soon. Historically, however, the best time to re-enter the market has often been when markets were the scariest. The key is to remain emotionally intelligent and keep in mind that, historically speaking, markets eventually do recover.

Q: What should I do with my savings?

A: If you have additional funds in savings—not including your emergency funds— there may be opportunities to expand your portfolio. Warren Buffet was correct when he said, “The only thing people don’t like to buy on sale is stock,” but now may be the time to take advantage of high-quality investments at lower prices. Please contact CWM if you’re interested in reviewing options available to you, depending upon your suitability.

Q: The Federal Reserve reduced interest rates to zero. How can I take advantage of this?

A: In addition to lower stock prices, thoughtful investors can also benefit from the reduced federal interest rate. The funds the U.S. government is using in response to the national emergency will likely result in a significant increase to our country’s national debt— meaning that at some point, tax rates will also increase to offset its liabilities.

If taxes are most likely to go up over the next few years, CWM advises taking advantage of today’s lower tax rates with a Roth IRA conversion. By transferring funds from your IRA to a Roth IRA, you’ll pay income taxes on those funds at a far lower rate today than you would likely pay 10, 20, or 30 years down the road. The same can be applied to your required minimum distributions (RMD). If you don’t need the extra income, you can postpone your RMD this year and instead roll it over to a Roth IRA to save on future taxes.

Q: As a CWM client, why am I not seeing huge losses in my accounts like my family and friends?

A: At CWM, we develop investment strategies based on the real required rate of return, or more simply, real returns. We hold strong to our philosophy that capturing all of the market “ups” is not as important as avoiding the downs. That’s why when the market was experiencing unprecedented growth last year, our risk-managed process veered the opposite direction of many other wealth management firms and adopted a conservative positioning in an attempt to manage our clients’ risk, and shield them from the market correction our systems predicted.

We’re proud to say that this approach has served CWM clients well. Although everyone will undoubtedly be impacted to some extent by the volatile market conditions, we encourage our clients to bear in mind that although short-term volatility may change your sentiment, it will not change your lifestyle.


If you or someone in your network needs a second opinion from an informed, disciplined advisor, CWM is here to help. Visit our contact page to arrange a complimentary, no-pressure phone call.


To stay up to date on CWM’s latest financial insights, follow us on Facebook, Twitter and LinkedIn or contact us to arrange a complimentary phone call.

The information is intended for informational purposes only and is not intended to be a substitute for specific tax, legal or investment advice. Investing involves risks including the potential loss of principal. No strategy or product can assure success or protects against loss. Past performance is no guarantee of future results.

Please consult a certified financial professional prior to making any investment decisions.

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