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Video: Investment Questions During COVID-19

Today, Mike Callahan, CPA, CFP, MST, Director- Wealth Management at Sachetta speaks to some of the common questions investors are asking these days. While it may be tempting to respond to the dramatic day-to-day market fluctuations we’re seeing now, Sachetta’s general advice is to stay the course and keep an eye on your longterm financial goals.


Full Transcript:

Hey, this is Mike Callahan, Director of Wealth Management for Sachetta Callahan. And we wanted to quickly talk about a few of the questions we’ve been getting from our clients. The first one is given everything going on in the stock market, should we adjust our investment strategy or asset allocation? And the answer is no. We want to make sure we stick to our long-term investment plan. We know that declines like this and the stock market happened from time to time. That’s why we have a diversified portfolio. We don’t want to react to, to any of these declines by getting too conservative or, or anything like that. I think what we should do is make sure that we have the proper expectations going forward. We should understand it’s, it’s possible that the market does go, go lower from here. Again, short term, that’s a lot of times a normal course of the market finding a bottom.

It doesn’t mean that anything’s getting worse or is wrong or anything like that. We should understand that even if it does, it’s, it’s probably going to be higher three to five years from now than it is today. And we should also understand that it may not go lower. There’s nothing that says it has to, it could potentially move higher from here and, eventually hit a new all time high at some point. Um, nobody really knows and that’s why we can’t react and make changes to the strategy, uh, based on what’s going on. Now the, the portfolio is diversified because we know times like this happen, um, and we need to ride them out. What we need to do is look at our financial plans. The financial plan is really where we should be focusing our attention to make sure that we’re still on track.

If there’s any changes that we need to make as far as spending or, or anything like that, we can make them. But that’s where we should really spend the majority of our time is focusing on is my financial plan on track regardless of what the market does, it should still be on track. Absolutely. Because we know the times like this happened, it’s kind of assumed in the plan. If you don’t know if the plan is on track or if you’re unsure, that’s that’s when you should call us cause we’d be happy to review it with you, talk about it. Make sure that everything’s still where we think it is and, and we can move forward from there. But, like I say, we should not be making changes to the investment portfolio at this point. Really we should be focusing on the financial plan.

The second question we’ve been getting a lot from clients is when, when does it make sense to refinance my mortgage? How do I know if it makes sense? And the short answer is it depends on a few things. It depends on how much can you save in the interest rate, what the balance of your mortgage is and what the closing costs might be. So if for a simple example, if you have a half a million dollar mortgage balance and you can save a half a percent on that mortgage, it would save you around $2,500 a year in interest. If the closing costs are $2,500, it’ll take you one year to pay that back. So if you plan to be in your house for more than a year, then it makes sense to refinance the mortgage and save that interest because after the first year you’re going to be ahead of the game and saving interest going forward.

So the smaller the change in the interest rate or the smaller your mortgage balance, it may make a little less sense. The bigger the mortgage, the bigger the savings in interest that it makes a little, a little more sense. If that’s something you want to talk about, feel free to give us a call. We’d be happy to have that conversation and help you decide whether it makes sense to refinance at this point. Obviously with rates as low as they are for a lot of people, that does make a lot of sense. So I think to summarize, I think as we said in one of the previous videos we did right now is the time to focus on what you can control, refinance your mortgage, look at your budget, you know, anything that you can control. Don’t focus too much on things you can’t control, like where the stock market goes short term, because over the long term that’s going to work out just fine. It’s going to recover. Eventually we’ll be at an new all time high and you’ll still be on track to achieve your financial goals. So if you have any questions, give us a call and we’d be happy to talk to you.

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