March 29, 2020

Hi everyone-

I hope this note finds you all healthy and safe. I wanted to reach out to you with some major changes from the past week and what Heintz Wealth Management is doing to maximize all available financial opportunities for your portfolio in this time of crisis.

Locus of Control

I have many mantras I use in my daily life. The most common saying I have been using lately is, “I can only worry about things I can control.” Outside our control, our work and our ability to save and to spend has changed. Taking a minute to recognize what you can and cannot control brings clarity and purpose. What we do have control over right now is your financial plan and how your investments are managed to fit your plan. HWM does this through close personal relationships with each one of you to understand your unique situation and to structure your investments to meet your goals. By focusing on what we can control, I have faith we will get through this stronger than before, driven by a renewed focus on what we’ve set out to do.

Das Kind mit dem Bade ausschütten

“To throw this child out with the bath” is a well-known German proverb from the 1500’s. As we all emotionally digest the weight of the financial losses we’ve seen in the last month, it is ever more important to stick to your plan and keep the appropriate amount of risk exposure commensurate with your goals. We want to keep the same if not more stock exposure, while readjusting the types of stocks we own to be better positioned. The moves up and down in the market will be shaped by investors moving back into areas that may be once in a lifetime opportunities.

We’re meeting virtually with money managers and seeing the market react to events and policy decisions. What normally takes months for an economic decline took days. Investors have been selling what they could, not what they wanted. We’re now targeting investments that work through a bottoming out and recovery of the economy, whereas just a month ago we were looking at an upcoming gradual decline. 

My first letter to you regarding the impact that the coronavirus pandemic was having on markets was only a month ago, but it almost feels like an eternity. Many of us are experiencing a tremendous amount of uncertainty. In a time where we need to be a close community to support and protect each other, we are self-quarantined in our homes. It’s unsafe for us to go to church or our local restaurants or be closer than 6 feet to our favorite people. Now more than ever it’s important to focus on what we can control so financially you can thrive once we move through this situation. Let’s look back on what we did together through this crisis as an example of what to do even better in the future. Please click on the links with your mouse to references I have included on the next page or contact me for more details.

CARES ACT and other Updates

On Friday, President Trump signed the CARES Act into law. This relief package is the largest amount ever spent by our government with the priority of preventing our economy from collapsing. Below are several key points that may benefit your financial situation.

  • Filing Extension for 2019 Taxes– On March 21, the IRS announced an extension for filing 2019 taxes until July 15, 2020. IRA and Health Savings Account contributions for 2019 are also now July 15, 2020
  • Recovery Rebate checks – $1,200 per person, $500 per child. Income limits and filing status determine your eligibility. If your situation has recently changed (moved, marital status, large change in income) you may want to file your 2019 tax return now. For other changes, update the IRS directly. Check the calculator to see what you’re eligible for.
  • What to do with your check – save, spend, pay down debt, or invest the funds.
  • Unemployment compensation – Between the elimination of a waiting period, compensation for the unemployed self-employed, bonus checks and extension of benefits for 13 weeks, these programs attempt to keep cash flow consistent for those without work.
  • Paycheck Protection Program – this is a very good deal for small business owners to keep business going. The IRS also is allowing deferral of some tax payments until 2021 and 2022. Contact me to see how this may help you.
  • Waiver of required minimum distributions in 2020 – For some of you this change could substantially reduce your taxable income in 2020. If you have or will be taking mandatory withdrawals this year, you may be able to find a tax planning tactic to take advantage of this opportunity.
  • “Coronavirus related distributions from retirement accounts” – If you are impacted by COVID-19, you can take a loan or withdraw up to $100,000 from your retirement plan or account.  If you’re under age 59 ½, the 10% penalty is waived.  For a withdrawal, the amount can be rolled back into your account or plan within three years as well as any tax amount due on the net amount withdrawn. This provision creates multiple opportunities for many of you, some in coordination with other new provisions.