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Covid-19: Keeping Composure For Your Long-Term Financial Health


During times of crisis, it is easy to feel the downward spiral will never end and forget that our economic history has been checkered with boom and bust cycles. The effect of the current global health crisis on the economy is not something we haven’t seen before when compared to other extreme market events, as we saw with the bust of the late 1990s or the financial collapse of 2008. This is not to downplay the realities of the current unprecedented situation we find ourselves in with the health risks of COVID-19. It is merely a reminder that we should seek to come out of a crisis financially stronger; by staying calm, planning, and taking logical actions.

Here are a few financial well-being tips you may want to consider to help your family sustain your long-term wealth goals:

  • Retirement savings – It’s frightening to see daily stock market volatility and real declines in value of over 20% YTD from the all-time high of the Dow being just under 30,000. But one of the best long-term wealth building strategies is to stay the course with your 401(k) or other retirement savings plan contributions. The deadline to make all IRA contributions has been extended to July 15th, 2020.
  • Cash-flow/Emergency fund planning – Establishing a rainy day fund for uncontrollable life events can go a long way in reduced anxiety. The general rule of thumb is to have 6 months of living expenses set aside for emergencies, in liquid assets to shield against large stock market swings.
  • Gifts – For 2020, up to $15,000 ($30,000 jointly) for gifts can be made to help family members (or any other individual whether related or not) in need without any tax consequences. 529 College Savings Plans can also be further leveraged for family members through a special “five-year averaging election.”
  • Tax loss harvesting – Selling stocks or mutual funds that have declined in value in taxable accounts can be a good strategy to offset taxable gains and boost after tax returns, and can also provide needed liquidity to re-balance portfolios in down markets.
  • Tax efficient borrowing – With interest rates at historic lows, you may consider refinancing mortgages and inter family loans at lower Applicable Federal Rates (AFRs).

Market volatility during a financial crisis is best managed by remaining calm and making logical decisions alongside your CPA, wealth manager, and estate-planner.

Berntson Porter is here to help you navigate these unprecedented times. Visit our online Resource Center for up-to-date information about COVID-19 legislation that impacts you and your business.


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