The last couple of weeks have been a whirlwind to say the least. Just a few weeks ago COVID-19 was barely on my radar. Now I think about the virus and its effect almost hourly. Recently over breakfast, my wife and I were adding up how many toilet paper rolls we have. Fortunately, we have more than I realized but feel free to tell your children to toilet paper our house- especially if it is 2-ply.
Below is a highlight of a few of the topics being discussed in the financial world.
1. As many of you know, the general stock market value has decreased significantly. At the time of my writing this article (3/20/20), Vanguard Total Stock Market ETF (mainly US-based stocks) was trading approximately where it was in February of 2017. Interestingly, at that point (same price-just different time), it was trading at the highest point it ever had.
I have had many more conversations with people talking about how they want to invest more than with people wanting to sell. That is encouraging to me as it appears from my own experience and when talking with other advisors that people, in general, seem willing to stay the course and follow their long term investment plan.
2. Mortgage interest rates are an interesting thing to monitor at this time. You have to balance closing costs, but it is possible to pay tens of thousands less over the life of a mortgage by getting a lower mortgage rate.
3. Federal 2019 individual tax returns are now due July 15th instead of April 15th. My understanding is this extension does not automatically apply to state returns. That said, Indiana has extended their individual tax return deadline to July 15th. I am happy to research your state specifically if you would like to know!
4. An economic stimulus bill is expected to be signed soon (and may already be by the time you read this). There are numerous provisions in the bill. The one receiving the most media attention involves sending payments from the government to taxpayers to supplement cash flow. It is likely that the payments will be limited depending on income. The final details will be released when/if the economic stimulus bill is signed.
5. Interest on many Federal student loans is waived. It will be interesting to monitor how this is implemented but not expecting this to dramatically change most people’s student loan strategies.
I have thought about the saying “be a thermostat not a thermometer” multiple times over the last week. Many people are on edge. I am having to consciously force myself to not be an alarmist. A positive tone may not cure a virus, but I actually do think it helps the economy (when done in mass of course). My encouragement for us is to set the tone.
Interesting Article(s) or Video(s)
The psychology in this article is fascinating to me. If I have no investments, the stock market drop doesn’t hurt as I still have no investments. If I have several million in investments, the stock market drop hurts even though I still may have millions in investments. Even though the second person could be in a better financial position, they may feel worse during a market downturn.
It is easy to take a closed fist, hold everything tight, posture. I would love to hear stories of you or others acting counter to this. One personal example, my brother called this past week to make sure we were okay and offered financial assistance if it was needed. Even though we are doing fine, that was still an incredibly encouraging phone call.
Thank you for reading! Please do not hesitate to reach out if you want more details about the above or would just like to chat!