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Stay the Course, What Does That Mean?

Roadmap

Volatility has been consistent throughout the COVID-19 pandemic. One other constant I have heard is, stay the course. Staying the course during an event like this may very well be the right advice, but I think there is another variable that needs to be looked at to help confirm that this is the right choice. Reviewing how the volatility has affected your plan is an additional component that needs to be reviewed. The plan is paramount in deciding to stay or abandon the course.

Investors mistake making buy/sell decisions for their investments with having a plan for their financial future that will dictate how the investments should be handled. This may seem like semantics, but it is not and there are definitive differences in the way you look at your portfolio and judge when to stay or change your course.

This reminds me of a quote by John F. Kennedy, “The time to repair the roof is when the sun is shining.”. This rings true with your investments and too. Typically, volatile times do not present an ideal time to change or amend your investment strategy or financial plan, you want to address these items when the sun is shining.

You should have a plan in place for your financial future. This plan will act as a roadmap, a guiding light to help you make decisions about your financial life including your investments. Investments are simply one component of your financial plan. The plan will help you make the decisions you need to reach the goals you are aiming towards. Whether you have a plan in place or not, now is the time to look at it or get one in place. This will ultimately provide you with the assurance of staying the course or the suggestion that you should consider adjusting your overall plan

Staying the course, without knowing what the course is, is simply looking at your investments and making an educated guess on where you believe asset prices will be soon. Making decisions based simply on market prices, and not your plan, can cause you to make a bad or wrong short-term decision that can harm you in the long-term.

To effectively determine if and adjustment needs to be made to your portfolio, you want to evaluate market fluctuations in terms of your financial plan and whether your plan is on or off track. This is what will indicate if the fluctuations have caused your plan to veer off course. Making decisions simply about your investments is like driving to a far destination, getting off the highway, and taking local roads the rest of the way because there was a small traffic jam. This may help you avoid five minutes of traffic but will add hours to your trip.

In my work with clients over the last 20 plus years, I have come to realize that most people are not concerned about the change in the value of their portfolios when markets fluctuate, and they see market declines. They are nervous about what it may mean to their overall financial plan and their ability to reach their goals and dreams. Essentially it is not the loss of the money, but what the money will ultimately be able to “buy” them. To be able to evaluate the impact the market fluctuation has on their ability to reach their goals, clients would need to have a financial plan. This would provide them with a clear view of how they will be impacted in both the short and long term.

We would be happy to discuss the recent volatility and how it may be having an impact on your plan. We can also help you get a plan in place so the next time volatility arises you will be prepared. Just contact us, Mitlin Financial, at (844) 4-MITLIN x12 to schedule a time for this review. Be sure to share this article with friends, family, and business acquaintances who might be interested too. We look forward to helping you, and them, get on the right path and stay there.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

RMD Alert! Did You Take One?

 

Alert

Required Minimum Distributions (RMDs) have been suspended for the tax year 2020. This was originally announced as part of the Cares Act when the pandemic first hit and was signed into law on March 27, 2020. There was a provision in the act that suspended all required minimum distributions for those of RMD age and those required to take them from beneficiary designated accounts.

Suspending RMD’s would provide individuals with the ability to skip taking monies from their retirement accounts while the markets were impacted by COVID-19 and also allow them to not incur the tax associated with the withdrawal. The Act provided straight forward guidance to those that did not take an RMD yet, but it was a bit unclear how it would affect those that may have already taken an RMD earlier in the year. This caused a bit of confusion and uncertainty on how to handle those particular situations.

Luckily, on June 23, 2020, the IRS announced that anyone who fell into the group who took their RMD in 2020 from certain retirement accounts would have the opportunity to roll those funds back into a retirement account following the Cares ACT RMD waiver for 2020. This announcement effectively extended the 60-day rollover period, for any RMD already taken, to August 31, 2020.

This gives everyone eligible the ability to take advantage of RMDs being suspended for 2020, whether they already took it or not. The IRS also clarified that this rollover would not count against the taxpayers' ability to only make one rollover every 12 months and the restriction on rollovers for inherited IRAs. We discussed this on a recent Mitlin Minute too.

This could provide significant help to those that may have large RMDs who have taken them earlier in the year. It will be important that this is handled correctly and documented properly. Those that have taken an RMD in 2020 should consult with their advisors (financial advisor and tax advisor) to consider whether it would make sense to return the RMD as if it was never taken.

We would be happy to assist you in determining whether returning or not taking your required minimum distribution in 2020 is right for you. Keep in mind that if you have already taken the RMD you only have until August 31, 2020 to return it and roll it back into your retirement account. Just contact us, Mitlin Financial, at (844) 4-MITLIN x112 to schedule a time for this review. Be sure to share this article with friends, family, and business acquaintances who might be interested too. We look forward to helping you, and them, get on the right path and stay there.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Mitlin Financial Nominated for Long Island Business News Reader Rankings as "Best Wealth Advisers" 2020

 Mitlin Financial, Inc. is pleased to announce that it has been nominated for the Long Island Business News Reader Rankings as "Best Wealth Advisers" for its 2020 Reader Ranking Awards.  As the winner of the 2019 award in the same category, we are looking to retain our title and could use your help!

We would really appreciate your vote and hope you can take the few seconds out of your day.

We do not take nominations like this lightly and really appreciate your support.  You can vote simply by clicking this link: https://mitlin.us/VoteMitlin2020 or by clicking the photo below.  You can also have the opportunity to win $250 from Long Island Business News. 

LIBN Reader Rankings 2020

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.  Mitlin Financial, Inc. did not pay a fee to be considered for this award, nor will it win any form of compensation if they win.

Making an Offer on a House? 11 Strategies to Win

front of house

So you’ve found your dream house and you’re ready to make an offer, but how do you make sure your offer stands out among all the others? How do you make your offer more appealing? Whether you’re dealing with a competitive housing market or a cautious seller, getting your offer accepted requires creativity, compromise, and a strong strategy. 

So how can you convince a seller to side in your favor? Check out these 11 strategies to help you seal the deal and make “home sweet home” a reality. 

  1. Get pre-approved for a home loan

Getting pre-approved will show the home seller you can actually afford to buy the home. This is an important step for a buyer in any situation, but it’s even more critical if you want to make the strongest case that your offer is solid.  

  1. Offer more than the list price

Whether you’re making an offer on a house in Atlanta, GA, or are looking to buy a condo in Dallas, TX, offering more money than anyone else usually wins the deal. So if you can afford it, offer more than the list price.  

  1. Add an escalation addendum 

When making an offer on a house, you can stipulate that if anyone beats your offer you’ll raise your offer by a certain amount, with a cap as high as you’re willing to go. This also helps you avoid overpaying, but still keeps you in the game in case there are other offers coming in. 

  1. Waive contingencies 

Contingencies are certain things that must be met in order to close a deal on a property – such as a home inspection. In multiple offer situations, buyers can waive some or all contingencies to reduce the seller’s risk and speed up the home selling process. Generally, the fewer contingencies you have, the stronger, but riskier, your offer. 

  1. Increase earnest money

Earnest money, also referred to as the good faith deposit, is typically 1%–3% of the sale price of the home and is applied toward the buyer’s closing costs. It also shows that a homebuyer is serious about the purchase of a home, because if they walk away from a deal after it’s been accepted, such as a change of heart, the home seller usually gets to keep the earnest money. By increasing the amount of earnest money you put down, you can show how serious you are about buying any home. 

6 . Increase the amount you’re willing to put down

A higher down payment typically means less financing issues with a mortgage lender and also less risk for a seller. So when you are wondering how to make an offer on a home and win, a higher down payment can make the difference. Presenting documents such as pay stubs, tax forms, and your 401(k) balance can also show that not only are you prepared to put more down, but you also have the funds to do it. 

typing on keyboard

  1. Write a personal letter to the seller 

Sometimes a personal offer letter can win a seller over when making an offer on a house. Tell them what you love about the home and try to make a personal connection. Compliment them on a recent renovation, a color palette choice, or the landscaping. It won’t always matter, but sometimes a personal touch such as a letter can mean more than having the highest bid. 

  1. Release earnest money early 

This means the seller gets your earnest money, in cash, prior to closing. The strongest offers release all of it immediately upon going under contract. Note: This option only makes sense if you waive all contingencies when making an offer on a house.  

  1. Be flexible with the closing date

If your lender allows and you’ve been through underwriting, you can promise to close quicker (15–21 days). Generally, the faster the closing process, the stronger your offer. However, the seller may be looking for a longer closing process. In that case, letting the home seller know that you’re flexible with the closing date could allow them the much needed time to move their belongings into their next house. 

  1. Arrange a rent-back agreement 

If the seller is nervous about selling their home before they can buy a new one, you can offer to be flexible with the closing date or arrange a rent-back agreement. This gives the sellers extra time to live in the home after closing. Essentially the buyer takes on the role of the landlord, and the seller becomes the tenant for a short period of time. 

  1. Pay in cash

This isn’t going to apply to everyone, but if you have the cash to cover the purchase price, offer to pay it all up front instead of getting financing. Not only are you eliminating the need for a third party to get involved in the deal, but you’re also showing the seller that you mean business. 

Emily is part of the content marketing team and enjoys writing about real estate trends and home improvement. Her dream home would be a charming Tudor-style house with large windows to let in lots of natural light.

Originally published by Redfin

 

What is a Bear Market?

 

Bear Market

One little known fact is how a bear market received its name. A bear, when attacked or going after its prey, will use its paw and motion downward to defend itself or get its prey.

Bear markets are a fact of life and one part of an overall market cycle. It has been over ten years since we have seen a bear market and due to recent volatility, it has come into the conversation. I am sure you have heard this term as well, but do you know what it means?

The technical definition of a bear market is where the markets have declined 20% or more from their recent highs. Should markets fall 20% or more in a few days it may not indicate a bear market. Certainly, if the markets decline, in total, 20 % or more over time and it is believed it will continue and not rebound it would be considered a bear market.

Bear markets are usually accompanied by an economic slowdown and rising unemployment. A bear market is usually indicative of an economy that is experiencing a lull which means corporate profits will experience a decline, spending will as well and layoffs will occur too. This is a natural part of the economic cycle and one you need to prepare for as part of your overall financial plan.

This part of the economic cycle is not one to be afraid and should be embraced. Bear markets do not mean all companies and all industries are being impacted negatively. There will be companies that will be well prepared to sustain themselves during an economic slowdown or bear market. It may mean a slight shift in your investment philosophy during these times. Also, for those with a long-term time horizon, the decline experienced during a bear market could present a tremendous opportunity to buy great companies at a significant discount.

Your financial plan must incorporate strategies on building portfolios that will endure in both bull and bear markets. I would also suggest stress testing your retirement plan against a bear market. Retiring during or shortly before a bear market can have an overall impact on your retirement plan. Testing this in advance of your retirement will help prepare you for retiring in this type of environment. This was most recently experienced by those who were retiring during the 2007-2009 bear markets.

We would be happy to discuss a bear market and how the Mitlin process helps you prepare for one. Bear markets are a natural part of an overall economic cycle and should not be ignored. It also does not necessarily mean all companies are set for a decline; it also presents opportunities. Just contact us, Mitlin Financial, at (844) 4-MITLIN x12 to schedule a time to discuss bear markets and your portfolio. Be sure to share this article with friends, family, and business acquaintances who might be interested too. We look forward to helping you, and them, get on the right path and stay there.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

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