Coronavirus and the 4 Financial Aspects You Should Be Paying Attention To

We live in tumultuous times. Hundreds of thousands of people around the globe have been directly affected by the Corona Virus AKA COVID19. 

As the country takes aim at trying to flatten the curve of infected individuals, many are forced to work in different environments.  Many more are facing the potential for challenging economic times and a potential extended recession. Volatile markets, stimulus plans, new threats, and opportunities are evolving and shifting by the minute. 

 To help ease your mind in these uncertain times, we’ve put together some brief insights from top experts in their respective fields to help you understand what these fiscal and political maneuvers mean for you and your day-to-day life. 

Let’s start with how this virus will affect your tax planning. 

Tax Planning & COVID19

From the tax planning perspective, the IRS has released its Coronavirus Tax Relief Plan which allows taxpayers to push back their ‘normal’ taxes and tax payments from April 15th to July 15th, in 2020.

However, you are still obligated to file your return or your extension request by April 15th, which remains the IRS’s due date. 

You can start by gathering your year-end documents (W2s and 1099s) and decide how you will file your returns.  For example, will you self-manage with a system such as TurboTax, or will you use a general tax preparer that works for a company such as H&R Block, or will you use a specialist such as a Certified Public Accountant? 

 The key decisions for most tax filers come down to the complexity of their current filing needs and cost. 

Financial Markets & COVID19

The financial markets too have taken a significant downturn, with small and large businesses struggling to find a footing on what may be a “new normal” for the foreseeable future. 

Some of the most hard-hit businesses are transportation and hospitality companies, who have experienced a massive decrease in business. Restaurants have switched to take out only establishments, sports leagues and tournaments have been suspended worldwide, and much more.  

The financial impact on these and other businesses has pushed the government to work on a stimulus package to provide financial assistance. Small business owners and homeowners can find up-to-date relief information on the government’s Disaster Assistance page. 

But the news isn’t all bleak. For those with the means, a move into the market now can lay a foundation for a significant improvement in investments and potential future rebound. Warren Buffet, perhaps the most famous of all investors, once said that investors “Should be fearful when others are greedy and greedy when others are fearful.” Intelligent investments now can me a brighter future tomorrow. 

Real Estate & COVID19

Real estate investments during this crisis require a bit more insight. If you currently own your own home and have equity in your residence, now could be a good time to access your equity to double down on your most secure investment. 

Should home sales decrease and home values begin to drop, if you take action now you could hedge against this by conducting a home valuation now. 

Another tip if you’ve experienced economic hardships as a result of the virus, such as being laid off or having your income drastically reduced, you may want to explore in-house loan modifications teams that are available as many are increasing their options.

 For example, you may be able to defer loan payments, request reduced payments, or be able to secure another form of relief. 

Lastly, if you were or still in the market for purchasing a home this may be a great time to negotiate on terms as many buyers have dropped out of the market and many sellers are anxious to unload listings.  

Lending & COVID19

On March 15th, the Federal Reserve announced it will cut its Federal Funds Rate to 0.00.-0.25%. 

What will that mean for your daily life? 

Well, it’s important to realize that the Federal Funds rate does NOT affect your credit cards, student loans, or mortgage rates. 

In terms of what this means, the Federal Funds rate is the percentages at what banks can borrow money directly from the Federal Reserve. However, once a banking institution has borrowed that money from the Fed, it will use it to fund different loan programs including credit cards, student loans, and mortgages. 

Nearly every institution will have a margin from what they borrow the money at to what the actual consumer lending rate would be. So, while you aren’t likely to find a bank lending at 0%, you are likely to find very low-interest rate loans that we haven’t seen the likes of for many years. 

This makes it the perfect time to take a quick look at your loan portfolio to find opportunities to lower your rates and save money. 

COVID 19 Financial Summary

While times are tumultuous now, there are a few strategies you should take regardless of what is happening in the world around you. 

These include: 

● Preparation: Being overly prepared will always be better than being unprepared. 

● Collaboration: Having an expert team to give you guidance, insight, and real-world experience can help you hedge against uncertainties. 

● Awareness: Stay aware of potential opportunities to leverage your finances for future growth. 

At Evolutions, we want to support you and our community in any way possible.  

If you have questions about what actions that you can take or need representation in finding the best service professionals to help you during this challenging time, please reach out and let us know how we can assist.  Please stay safe and healthy. We wish you all the best.

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