The Coronavirus pandemic has clearly created an international economic disaster, and domestically it is damaging everyone, from large corporations, business people, entrepreneurs, to average Americans. As the U-S Stock Market continues its volatility, the question is how to survive it, and bounce back. The health of humankind is our #1 priority, but control over your financial health is feasible with targeted, intelligent action you can take to mitigate a Bear Market.
Quite frankly, some may not not have enough years to recoup lost assets and are reluctant to take additional risk and who can blame them. Financial Advisers are predicting new benchmarks– a “New Normal.” But the fact is that there are ways to fight this free fall with “Recovery Plans” tailored to everyone from working people, business owners, professionals, sole proprietors, executives, and even retirees. Step one is finding money.
President Trump’s address to stimulate the economy touched on some solutions, such as delaying the payment of your taxes. Translation: turning those taxes into your working capital. Not bad, but if you’re smart, his philosophy might have better applications. Delaying your tax payments several months will certainly give you use of that money (assuming you don’t squander it) but remember you still have to pay your taxes after the government delay expires.
The President also said he wanted to liberalize Small Business Administration (SBA) loans which may be critical in the short term to save small businesses who cannot borrow emergency funds elsewhere; but it’s a bandaid solution; you still have to pay it back. These disaster relief solutions do not target more successful businesses, executives, and professionals who are also bruised and bloodied from the downturn; after all they had the surplus dollars to incur more risk. Though they have lost assets, they still have good earned income, and are paying substantial income tax– State and Federal– up to 50% on the top dollars. Effectively, their last tax cut cost them more and they are now laser-focused on asset protection and liquidity.
Not paying taxes and keeping those dollars to invest will nearly double those investable dollars. Let me break it down:
*If you can buy your investments and deduct the purchase in a 50% income tax bracket, you have doubled your investment.
*Without a deduction, you earn $100,000 at 50%— pay $50,000 to the IRS and you are left with only half of the $50; to invest.
*I can make it deductible so you keep the $50,000, leaving you with $100k for investments.
*With this kind of plan structure, you get tax-free growth on everything, and it solves short-term gain issues. Call it interest-free investment capital.
We accomplish this by utilizing government-approved programs for businesses that allow you to create substantial deductions and keep these tax dollars working for you. Stop the bleeding. There are even plans for average working individuals who don’t own a business to keep those tax dollars.
If you are wondering why you haven’t heard about these solutions, it’s probably because you thought it only applied to the super rich. Not true. This is just good common sense that takes experienced financial professionals who understand it and can execute quickly. I realize we are going through frightening times but cool heads and proactive moves always empower us Americans. Opportunity through adversity. Health first but there are steps you should be taking right now to staunch the economic loss.