Bargain Buying
First, volatility often creates buying opportunities. When fear drives the market down, strong companies—ones with solid earnings, good management, and long-term potential—can see their stock prices drop below their true value. This is like finding high-quality goods on sale. For investors with cash on hand or a long-term view, it’s a chance to scoop up these stocks at a discount. Over time, as the market steadies, those investments can grow as prices rebound to reflect the company’s real worth.
Tip: Consider making or increasing retirement plan contributions, and adding funds to your brokerage account, or 529 college savings plan.
Tax-loss Harvesting (aka: strategically lowering your future tax bill)
When the market dips, some of your investments may temporarily drop below what you paid for them. That’s not ideal on the surface, but in a non-retirement account, we can turn that paper loss into a tax advantage. Tax-loss harvesting lets us sell those investments at a loss, then use that loss to offset taxable gains you might have from other sales—like stocks you’ve sold at a profit this year. If your losses exceed your gains, you can even reduce your regular income taxes by up to $3,000 per year, with any extra losses carried forward to future years.
Roth IRA Conversions:
When you convert funds from a Traditional IRA to a Roth IRA, you pay income taxes upfront on the amount you convert. The catch? That tax bill is based on the value of your account at the time of conversion. During a market decline, your IRA’s value is lower—meaning you’re converting fewer dollars and paying less tax to get those funds into a Roth. Once the market recovers (and historically, it always has over time), that growth happens tax-free in the Roth—no taxes on withdrawals down the road, unlike a traditional IRA.
Make Traditional and/or Roth IRA Contributions for last year:
Ask your CPA if there are any deductible contributions you still have time to make before the tax filing deadline for 2024.
Cooler heads prevail:
There’s an opportunity in staying calm while others react. Volatile markets often spark emotional decisions—selling low out of fear or chasing highs out of greed. If you stick to your plan, you’re already ahead of the game. Patience can pay off when others overreact, leaving you positioned to benefit as the dust settles.
Here’s the key takeaway: volatility is normal, and it’s not all bad news. It’s a natural part of the market cycle that creates openings for those who are ready. Our strategy—your strategy—is built to handle these swings, and together, we can turn them into moments of strength. Whether it’s picking up bargains, locking in profits, or simply staying the course, I’m here to guide you through it. Let’s focus on the opportunities ahead, not just the noise of the moment.