Capital Growth Inc’s Director of Client Services, Erica Tanner, recently joined CBS8’s Morning Extra with Heather Myers to share advice on taking control of your finances during this economic downtime. She shared our Financial Relief Fact Sheet and useful tips and opportunities to take advantage of right now.
Read the transcript below or watch the video here.
Heather Myers (HM): We're now several weeks into the coronavirus pandemic and a lot of you might be wondering what financial move should I be making right now and what should I not be doing right now. Let's bring in an expert this morning. The Director of Client Services from Capital Growth Inc right here in San Diego, Erica Tanner is joining us. Erica, first of all, good morning.
Erica Tanner (ET): Good morning, Heather. How are you doing?
HM: I'm doing great but a lot of people have questions, including myself. So, if you don't mind, let's just jump right into this. When it comes to our investments, maybe people are contemplating “do I still contribute to my 401k or my IRA?”, “what should I be doing right now?”
What do you advise?
ET: Well, I think the natural inclination in this is you’re scared, you’re nervous, you want to turn off your contributions and really you should be doing the opposite and taking advantage of this market volatility.
Of course it’s going to depend on if you have your job or not. So, if you do still have your job and you’re lucky enough to contribute to your 401k, at least contribute enough to catch your companies matching contributions if they offer it.
That’s what I would definitely say. To go against your emotions. Don’t invest on your emotions but just follow the plan that you have established.
HM: What about for people who would like to borrow money against their IRA or their 401k to float them to get through the next couple of months. Is that advised or should you do that just as a last resort?
ET: It’s definitely a last resort but some people are really struggling and nervous. Just keep in mind though that it is a loan that you are required to pay it
back or you’re gonna suffer some consequences and tax liabilities.
HM: Speaking of tax liabilities, let's kind of jump into that for a moment. I know people would probably want to contact their CPA, obviously. The tax season got pushed into July now. Is there any extra deductions people might be able to take or things that they should be asking about?
ET: Well, there are a few things that you can be doing to lessen your liability.
For some people it might be advisable to do a Roth conversion or a partial Roth conversion to take advantage of this volatility and lessen your tax liability.
You can also not take your RMD from your IRA and not have to sell low in this market. It’s something that’s just for 2020 and if you don’t need that money maybe you shouldn’t take it.
HM: As far as interest rates are concerned, what are you seeing?
I know they're kind of all over the place for a little while, but is it worth, at this point, running down the route of perhaps refinancing your home?
ET: I definitely think so. I mean it’s gonna depend on everyone’s personal situation, what your current rate is. But I think it’s worth a call or an investigation and to see what you qualify for. Especially if you have a credit card and you have a high interest rate, it’s probably worth a phone call to your creditors to see if you can qualify for a lower interest rate.
HM: As far as your financial affairs, a lot of us are working from home or maybe have a little bit more down time I guess if you're not an essential worker right now.
Should there be things that people should start crossing off a checklist?
ET: Absolutely and I think this might be one of the most important things because people put it off. So, if you have not established a trust or a will, seek an estate planning attorney. Get that
established. Get all of your financial accounts and your home in the name of your trust. So many people don’t do this and when they pass away, they leave their loved ones hanging with all of the trouble of trying to resolve it in probate.
Also make sure that your IRAs have beneficiaries and they’re up to date. A lot of people don’t realize that they haven’t established it and then again, you leave your loved ones to deal with that after your passing.
Go to ssa.gov. Check your Social Security Statement. Make sure that they have all
of your income history so that when you do claim your Social Security that all of it’s there for you to claim and there are no errors. These are super important and I deal with them all the time in my position to help loved ones figure it out after a passing.
Just do yourself a favor. Your future self will thank you. Your family will thank you. It’s so important to do that especially because you have the time now.
HM: If people have questions regarding their finances, is going to a financial advisor the best bet right now or are they ultimately just gonna be shelling out more money?
ET: I think what I really wanted to do is to let people know that you don’t have to do this alone. You don’t have to be scared right now. Because it’s really scary and we don’t know where this economy is going.
But we have gone through this before. We have gone through cycles of down markets before. Seek that professional advice. Look for a financial advisor who’s qualified, who has gone through a storm like this and has navigated it and can help you navigate through your situation.
HM: You mentioned that there's a checklist on your website?
ET: Yeah, there is. If you go to our website, capitalgrowthinc.com, there is a checklist about what I spoke about; what things you can be doing to take control and not feel so nervous; and things that you can do through this that are really positive and can help you come out on the other side better prepared for the next time this happens.
HM: Erica Tanner from Capital Growth Inc, thank you so much for your time. We do appreciate it.