19/Nov/2008
Opportunity is Knocking!
Make Strategic Money Moves Sooner Rather Than Later
By Marcel Dupre, JD, MBA
President and Portfolio Manager
Wealth Planners, L.L.C.
Change is on the horizon, and smart investors and/or savers know changes to their portfolios must follow. Here are some things you will want to take into consideration:
Sell low cost basis stocks.
You may have been holding onto some individual stocks or other assets because you were afraid to realize huge capital gains which would trigger a big tax bill. Now you can probably sell most or all of these investments and reinvest the proceeds without tax consequences. People who own local stocks such as Exxon, Lamar, etc., need to take advantage of this temporary window of opportunity.
Convert IRAs to Roth IRAs.
Tax rates will most likely be higher in the future to pay for the things Congress passed and for the new president’s list of things he wants. Because of this, having more money in a Roth IRA is a smart move. If you earn less than $100,000 a year and the conversion won’t increase your income above this number (every dollar converted is taxed at your ordinary income rate), then take advantage of the lower values of your accounts by doing a conversion. Why not pay the taxes you owe on the conversion from money you have saved?
Rebalance.
We are currently recommending rebalancing to sell more bond funds and buy stock funds. This is a great time to use excess funds and take advantage of this buying opportunity in stocks. Also, you may want to slightly under weigh your bond and cash holdings in the near future because we will more than likely have inflationary pressures coming out of a recession, which will be terrible for these assets. Real estate funds, or real estate in general, as well as high quality stocks, will probably do much better than bonds or cash in the near future.
Save and Pay on Debt.
Make sure your financial house is in order by using these market-driven urges to save and pay off debts. Unfortunately, many people are yield shopping on money market funds, etc. which is a waste of time in this temporary low-rate situation. Instead focus on having a nest egg of 3 to 6 months of income that is easily accessible and safe (money market, CD, savings account), and on saving money in retirement accounts, taxable accounts, custodial accounts, etc. FDIC (banks) and NCUA (credit unions) insurers have increased the limits on the amount they will protect to $250,000 per account so it will be easier to consolidate.
For more information on these or other topics you may want to discuss, please email (marcel@professionalinvesting.com) or call me at (225) 757-8007. And please feel free to pass this information along to others you think may benefit from these down markets.
Make Strategic Money Moves Sooner Rather Than Later
By Marcel Dupre, JD, MBA
President and Portfolio Manager
Wealth Planners, L.L.C.
Change is on the horizon, and smart investors and/or savers know changes to their portfolios must follow. Here are some things you will want to take into consideration:
Sell low cost basis stocks.
You may have been holding onto some individual stocks or other assets because you were afraid to realize huge capital gains which would trigger a big tax bill. Now you can probably sell most or all of these investments and reinvest the proceeds without tax consequences. People who own local stocks such as Exxon, Lamar, etc., need to take advantage of this temporary window of opportunity.
Convert IRAs to Roth IRAs.
Tax rates will most likely be higher in the future to pay for the things Congress passed and for the new president’s list of things he wants. Because of this, having more money in a Roth IRA is a smart move. If you earn less than $100,000 a year and the conversion won’t increase your income above this number (every dollar converted is taxed at your ordinary income rate), then take advantage of the lower values of your accounts by doing a conversion. Why not pay the taxes you owe on the conversion from money you have saved?
Rebalance.
We are currently recommending rebalancing to sell more bond funds and buy stock funds. This is a great time to use excess funds and take advantage of this buying opportunity in stocks. Also, you may want to slightly under weigh your bond and cash holdings in the near future because we will more than likely have inflationary pressures coming out of a recession, which will be terrible for these assets. Real estate funds, or real estate in general, as well as high quality stocks, will probably do much better than bonds or cash in the near future.
Save and Pay on Debt.
Make sure your financial house is in order by using these market-driven urges to save and pay off debts. Unfortunately, many people are yield shopping on money market funds, etc. which is a waste of time in this temporary low-rate situation. Instead focus on having a nest egg of 3 to 6 months of income that is easily accessible and safe (money market, CD, savings account), and on saving money in retirement accounts, taxable accounts, custodial accounts, etc. FDIC (banks) and NCUA (credit unions) insurers have increased the limits on the amount they will protect to $250,000 per account so it will be easier to consolidate.
For more information on these or other topics you may want to discuss, please email (marcel@professionalinvesting.com) or call me at (225) 757-8007. And please feel free to pass this information along to others you think may benefit from these down markets.
