A Word of Hope
I don’t want to downplay the havoc created by COVID-19. We are living in a world that nobody could possibly have envisioned a few months ago. The impact caused by the virus has disrupted life around the globe. We have friends and loved ones who are dealing with this disease. It’s incredibly unpleasant.
Yet, unexpected blessings have surfaced. People are reaching out to family and friends via texting and emails. Some are even connecting the old-fashioned way–by phone.
Families are closer than they have ever been before. Activities and jobs around the country have been suspended but not ended. And I am confident we will see an economic recovery take root and the pandemic will subside.
We are a resilient people. Together we will get through this dark night, and we will be stronger for it.
A Bounce off the Bottom
Since last month’s low, the S&P 500 Index rallied 25% through April 9. Technically, a 20% rally from the market’s bottom constitutes a new bull market–technically. As of April 9, the S&P 500 Index was a modest 16% below its February 19 peak (St. Louis Fed data). The recovery has been cautiously encouraging, and I believe there are three variables that can be cited.
First, the federal government passed the CARES Act. The bill includes over $2 trillion in spending, generous jobless benefits, loans and grants to businesses, stimulus checks, and more. It offers a much more aggressive response than in 2008. More will be needed, but it’s a good start.
Second, the Federal Reserve has aggressively responded. Pre-crisis, there were questions whether the Fed had the necessary tools in its tool kit, given that interest rates were already low. Apparently, they do.
With much greater speed than in 2008, the Fed has launched numerous programs aimed at propping up the economy–from big business to Main Street.
The two-pronged attack has not been executed flawlessly, but it has cautiously encouraged investors to dip their toes back into stocks. While the economic outlook remains fluid, investors are trying to discern some form of an economic recovery in the second half of the year.
Third, there are signs the virus may be peaking. An April 12 headline in Bloomberg News offered a cautiously upbeat headline: “CDC Says U.S. Near Peak; 70 Vaccines in Pipeline.” With signs that new cases may be peaking, talk is surfacing over how to best reopen shuttered industries.
A Word on Timing the Market…
I’ve stressed many times in the past how dangerous it is to time the market. You set yourself up for two mistakes: When to sell. And when to buy back in. There is no crystal ball on this! It is highly ill-advisable! I’ve used this quote before, but I’ll use it again:
Our recommended retirement strategy is to:
- Define an income stream to meet your monthly bills
- Have an Emergency Fund for unexpected expenses
- Design a well diversified and properly correlated portfolio for your long-term needs, such as Long-Term Care
If you do not have a Retirement Plan from us, it is worth a 15 minute read on our philosophy here: Main Pillars of Retirement Planning. This should alleviate any ambitions to market timing!
Update your Retirement Plan!
If you have a written Financial Plan in place, it is essential that it get updated. If we did the Plan for you, you can update it yourself by plugging your new account numbers, income, and goals into the Planning Software. Go to our Client Portal and login. You can do this for No Charge. Your changes will not be saved, however. If you want a Plan update, we can perform that as a paid service for you.
Understand the CARES Act
Read our summary of the CARES Act. There is a lot of good information in that article!
Consider Refinancing or Restructuring your Mortgage
I had never heard of “restructuring” a mortgage until recently. Basically, if you go back to your current lender and ask for a “restructure” they may be able to offer you new terms (i.e. lower interest rate) for only a minimal charge, such as $1,000. I just did mine. It sure beats paying $3,000-4,000 in closing costs with a new provider!
Renegotiate your Other Bills as Well
You may be able to get a break on your auto insurance, phone bill, and other services if you ask. It only takes a phone call to find out.
Enact Smart Cybersecurity Procedures
Please be careful. We are living in uncertain times. While I am confident this will pass, uncertainty breeds fear, and there are criminals all over the world ready to cash in on your fear. For general cybersecurity recommendations, please read our Insights article Protecting Your Financial Data.
What We Are Doing to Help
Last month, I announced two things that may help. I will continue these for at least a couple of weeks:
- If you are laid off or one of the many experiencing economic hardship, I’m offering No-charge / No-obligation office hours in 30-minute blocks to address your personal situation. Private and confidential. No shame. I’ve been through this myself and you can read about it at About Mike Kastler
- No-charge use of our financial planning software for some basic functions like a financial dashboard, budgeting, and setting goals. It may be just what you need to figure out where you’re at, especially now. You can read more about it and start your financial planning journey as a do-it-yourselfer here: Our Financial Planning Software
If you have questions, concerns, fears, and doubt, that is totally understandable. I really do get that. Please remember, my door is open for you to approach with questions.
About Kastler Financial Planning
We are a fiduciary, fee-only, and independent financial consultancy firm. Our core purpose is to improve the financial life for each and every client we serve. Our vision is that people have access to affordable and professional fiduciary financial planning, retirement planning, and investment management services, without the pressure or bias of product sales or commissions.
We specialize in fee-only Financial Planning services for young to mid-career families, Retirement Planning for those at or near retirement, Small Business Retirement Plan Consulting for small business owners, and Investment Management Services. We perform these services either as hourly, a one-time fee-only project, as on-going financial planning, or Assets Under Management (AUM), depending on your needs.
Whether you live in our backyard or across the country, we aim for a pleasant client experience through our Client Portal and computer screen-sharing technology.
If you have any question on how our services may apply to you, please contact us at the number below or submit an email through our Contact Us form.
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Kastler Financial Planning | Clarkston, MI 48346