10 financial moves to make the most of uncertain times

With tensions rising as fast as gas prices, you may be wondering what you should do to protect your assets or make the most of climbing interest rates.

Below are 10 practical tips you can do right now. However, we sincerely believe the most important thing you can do right now is pray. Pray not only for the people of Ukraine during this tragedy, but also for those who are providing aid to refugees fleeing this terrible situation. In the midst of suffering we know that peace can only come from God. So our prayer at Sound Stewardship is that the peace of God, which surpasses understanding, would go with the people of Ukraine. 

As you reflect on what else you can do in this situation, here are some specific ideas that coincide with our foundational principles:

1. Give generously to organizations that are running to help meet the needs of the victims of this war. If you don’t know where to start, the National Christian Foundation has compiled a list of 20+ charities on the frontlines of the war in Ukraine. The team at Sound Stewardship used this list to donate from our Sound Stewardship Foundation as well as individually.

2. Increase your cash reserves to be prepared for the unexpected. Our Principle #3 affirms the importance of having savings for such a time as this. You never know when something unforeseen will happen.

3. Purchase Series I Savings Bonds for an inflation-adjusted savings rate (currently 7.12% as of March 2022). You can acquire up to $10,000 of I Bonds per person in your household, although they are inaccessible for one full year. With inflation steadily rising these are a great way to invest cash reserves that you won’t need for 12 months, but will be safe in the meantime.

4. Pay down or eliminate debt. Debt transfers your financial burdens into the future, but paying it off brings freedom. We have explained in the past what World War I teaches us about managing money and why it is best to avoid debt.

5. Increase your 401K contributions to the new maximum of $20,500. This allows you to “buy the dip” that the market has experienced in 2022. Don’t forget, if you are over 50 years old, you can contribute an additional $6,500 into your 401k. If you include a portion of Roth 401k while the market is down, any gains from a rebounding market will also be tax-free in the future.

6. Eligible to make a Roth IRA contribution for 2021? Be sure to do so before April 18, 2022, for a 2021 contribution. This is another way to invest new dollars into this current market decline.

7. If you’ve maxed out 401Ks or can’t do a Roth IRA, use a taxable brokerage account to invest regularly instead. These accounts have more flexibility than retirement accounts, and make great resources for long-term donations (a tax-free way to avoid the gains!).

8. Already have a brokerage account? Consider tax loss harvesting if an investment is currently worth less than what you paid for it. After selling for a loss, you could buy a similar “replacement investment” to stay in the market. You can then decide whether to repurchase your original holding if desired after 31 days. It’s impossible to predict the stock market, but this is one way to use a down market for your benefit.

9. If your IRA balance has declined with the market, consider a Roth conversion. This is a taxable transfer from an IRA to a Roth. As the market increases, the goal is that those depressed shares that you transferred will recover and grow in a tax free environment.

10. Take advantage of market volatility with opportunistic rebalancing. By selling assets that have gone up (like precious metals) to buy holdings that seem “on sale” (like technology stocks), you force yourself to automatically buy low and sell high. 

Contact one of our Wealth Advisors if you would like to discuss any of these things further and see what the best options for you personally could be in these uncertain times.

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