Market turbulence can be hard to deal with, but we know that market pullbacks are a normal and unavoidable part of investing, especially over the shorter-term.
Unfortunately, no one can predict or control the market, and trying to eliminate market volatility can cause you to miss out on the generous long-term growth that market investments can provide.
But there is a silver lining to this market pullback.
Here are two ways you can profit and make lemonade out of the market’s lemons.
Tip #1: Do a Roth conversion
Last year’s SECURE Act made Roth conversions more attractive by taking away valuable “stretch” distribution options from clients with large IRAs and 401(k) balances. Going forward, it’s better to have more money in non-retirement or tax-free accounts, and less in tax-deferred accounts like IRAs.
So converting IRA funds to a Roth can be a smart move. It lets you prepay taxes now, when your tax rates may be lower, and helps you build up your tax-free nest egg. And when market values are down, your conversion goes further.
Hint: A series of smaller Roth conversions are better than one huge conversion, as it lets you time conversions to take advantage of changing market conditions.
Tip #2: Look into refinancing your mortgage
Mortgage rates have dropped to historic lows, and if you plan to be in your house for several more years, you might be able to score big savings. We’re happy to work with clients to see if a refinance makes sense. A refi can be a great way to lower monthly costs and possibly save thousands in interest by shortening mortgage maturities.
Does a refinancing make sense for you? Check out our recent interview with CNBC:
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