Bear Market Strategy

In this episode of Berry’s Bites, Chris Berry answers the question: What is your strategy for this bear market?

Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link or give our office a call at 844-885-4200.

Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.

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Episode Transcript:

What would be the strategy for the bear market? What are the opportunities right now and that’s really what I’d like to focus on? Because we can’t control the market we can’t control events we can only control our reactions to these events so yeah seeing the market down 16, it’s not a good thing by any means no one likes to see the red but what are the opportunities what are the things that maybe we should be considering and one of those things I think you’re kind of touching upon this is now might be the time especially if you have IRAs or pre-tax accounts like let’s say we have xyz mutual funds inside of your IRA.

Okay and let’s say it just dropped 15 a simple strategy might be too, because again most people think taxes are going up in the future think of it like a slinky right those old slinkies we stretch it out it’s in the ira okay now the market drops and now it’s shrunk. Well now might be an opportune time to do something like a Roth conversion don’t like to get it into timing the market too much but this is something that we just did with one of our clients a Roth conversion.

Where now if we say okay now this money is inside of a Roth that can grow tax-free and we still have that same xyz mutual fund or I’d say even maybe invest more aggressively as things rebound which they always do now we can get that rebound inside of the tax-free bucket. Similarly, if you had an asset protection trust like a castle trust and i was meeting with a client right before the webinar has about 1.1 million pre-tax near retirement age and are concerned about long-term care costs well now with this dip gives us more room again if it’s like assuming xyz mutual fund drops 15.

Now well let’s move xyz mutual fund into the trust paid a tax and now we can get the growth inside of this asset protection trust that’s probably the biggest thing where we’re looking at what can we control taxes are one of those things that we can get some control and make some decisions in terms of what else to do in the bear market.

So that would be kind of strategy number one to think about number two would be consider the amount of risk you’re really willing to take on now might be a time to reassess and I’m not saying that you should go to cash or anything like that but when I talk to clients a lot of times they say “oh I’m aggressive” I’m aggressive, it’s easy to be aggressive when we’ve been on a 13-year bull run but now now we see okay what can happen the markets can drop so maybe now you’re not really as aggressive as you thought you were and I’m not saying you should move to cash or anything or I’m not even suggesting you should move more conservative but I would just re-analyze how much risk you’re really willing to take on so that would be a second thing to think about and then the third thing to think about just repositioning your assets into maybe safety or growth this is where sometimes we’re repositioning assets still inside of like an IRA or a brokerage account repositioning those assets so that we can have our principal protected but still maybe get a 20 rate of return so there’s things that offer safety and growth so maybe we want to think about moving more money to safety growth versus the volatility of the market.

We’re still yeah we can collect the upside of the market but maybe we want to limit our downside exposure moving forward and still have a good rate of return there here we go fourth thing and I’ll tell you what it’s hard and again most people are expecting a lot of volatility for the rest of the year so it might be hard to stomach this but maybe now’s the time because everything is low is to buy maybe we get more aggressive in the market.

So okay we had a dip we know there’s going to be volatility but let’s ramp up the risk now assuming you’re willing to deal with the ups and downs with the idea that hey now’s the time to buy because everything just ditched hopefully that answered your question give you some things to think about but yeah Roth conversions moving money out of the IRA thinking of it kind of like a slinky where it just shrank well now let’s move it out and move it and have that growth somewhere else whether it’s acid protected in a trust or maybe a Roth something like that second consider the amount of risk you’re really willing to take on maybe it’s time to reevaluate that third.

Maybe you could reposition some of the assets from the volatility of the market to something that offers safety plus growth and then fourth maybe now’s the time to lean in and get a more aggressive or if you have money sitting on the sideline in cash maybe now’s the time depending on your situation to move it into the market and collect hopefully some of the upside but again I think for the rest of year we’re going to see continued volatility so if you’re risk-averse that might not be the strategy to do. Thank you.









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