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3 Shrewd Maneuvers in a Down Market

June 28, 2022
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It’s natural to think “defense” during a bearish market season. But why not mix in some “offense” with your defense? Here are three moves we can discuss together that may be helpful during the current market downturn.

  1. Invest Your Excess Cash: If you have excess cash earmarked for a long-term goal (retirement or college, for example), a downturn may present an opportunity. Over the last three years, the Standard & Poor’s 500 compounded annual growth rate was 9%. Even with all the pandemic-related volatility, that’s still shy of its historical average.1

  2. Consider Series I Savings Bonds: With inflation at 40-year highs, you might consider some fresh ideas for investing. I Bonds pay a rate of return plus inflation protection and are backed by the U.S. government. You can visit TreasuryDirect.gov to open a free account (as always, reach out if you have any questions).

  3. Take a Look at Taxes: Each year, taxpayers can deduct up to $3,000 in realized losses. If your losses exceed $3,000, you may be able to carry them forward into future years. Make sure to speak with your tax professional before making any decisions.

I’m confident we’ll see a brighter economic picture before too long. In the meantime, it’s a shrewd move to find ways to better your position, and I’m always available to help you think it through.

1. Yahoo Finance showed the S&P 500 at 3020.97 on June 24, 2019, and 3,911.74 on June 24, 2022. Past performance does not guarantee future results, individuals can’t invest directly in an index, and the return and principal value of stock prices will fluctuate.

Series I savings bonds are a low-risk savings product that can be a hedge against inflation. Their principal and interest are guaranteed by the federal government, however, they are not FDIC insured. Their annual interest rate is derived from a combination of a fixed rate and a variable semiannual inflation rate, which is set based on changes to the CPI-U. Interest earned is subject to federal income taxes unless used for qualified education expenses, but not state or local income taxes, and is paid when the bond is cashed. The I Bonds must be held for at least one year, and if cashed in before five years, the last three months of interest is forfeited. The bonds earn variable interest for 30 years if not cashed before they mature. There is an interest rate risk and opportunity risk where I Bonds are particularly susceptible during periods of low inflation and the rare instances of deflation.  Past performance does not guarantee future returns.  Investors cannot invest directly in an index.