Just an Update – Friday, April 3rd
Last week we saw two significant events happen in the market. First, on Monday, March 23rd, the market put in a possible bottom at 2,237 (S&P 500). Second, just 3 days after that, on Wednesday, March 26th, we saw the market back at 2,630 (a rebound of 17%). In the short-term don’t be surprised to see the markets go back down and re-test the lows from March 23rd. Considering that there is more negative news on the virus to come out (more infections, more deaths, more unemployed, more companies’ quarterly earnings affected, and just the negatives of people having to shelter-in-place) the markets may not be finished with their decline. Yes, we remain positive about markets recovering over time, but in the short-term we may still see ‘red’.
On another note, here a piece of good news. As a part of the CARES Act signed into law on March 27th, RMDs (required minimal distributions) have been waived for traditional IRAs, SEP-IRAs, SIMPLE-IRAs, 401(k), 403(b), and 457(b) plans. Additionally, RMDs have also been waived on non-spousal inherited IRAs for both Roth and Traditional IRAs. For someone who has already started their RMDs (but not completed them) it is possible to simply discontinue the remaining amount through the remainder of 2020.
Additionally, here is another forgiveness that some will appreciate: for anyone who turned 70½ last year and were planning to delay their 1st RMD until April 1, 2020, that RMD is also waived. We would suggest anyone who can reduce or stop their withdrawals this year should strongly consider this. The benefits could be reducing income taxes as well leaving this money invested to hopefully regain some lost ground. If you would like to reduce or stop your RMD please let us know sooner rather than later.
Also, keep in mind another piece of good news: unless you are taking withdrawals (or selling) during this time, you have not lost any shares. That means that while your values are down, your shares are not. So, when prices eventually do recover, you can regain your value (and possibly more if you add or reinvest during this period).
Very soon, if not already, investors all across the country will receive their March statements (including their employer 401k statements) and many will be very surprised how much their account ‘values’ have declined. Even though they have heard how much the markets have corrected they have not calculated this affect into dollars. Our suggestion is to not overreact and try to remain positive, not focusing too much on these quarterly/periodic statements. Over time, as things get better, we will help you regain ground and continue your path to reaching your long-term goals.
From each of us thank you for the opportunity to serve you and walk this journey with you. Many of you have said encouraging words and voiced prayers for us. Please know we appreciate you and are committed to helping you through these days and look forward to the better days ahead.