3 Tips On Investing In A Fluctuating Market

Financial Advisors Share With Us How To Invest In A Fluctuating Market


With the stock market constantly fluctuating, you might be wondering, “what should I do with my money?”. I had a chat with Alex Boeri and Eric Strong, financial advisors from Miller Avenue Advisors, for some advice on how to weather the market downturn. 



Here are their top 3 tips on how to handle your finances in a fluctuating market.


Portfolio Rebalancing

During times of volatility, take the time to reevaluate where your portfolio stands. We recommend having well-diversified strategies to balance your investments. Being based in the Bay Area, many people may feel like they are overly concentrated in tech. With the tech sell-offs this may be a good opportunity to capitalize on some gains, and deploy investments into other areas of the market. Taking losses is not always a bad thing because you can offset future gains with those losses. 


Loss Harvesting 

Tax-loss harvesting is an important strategy to understand, especially when you have a lot of gains in certain areas of your portfolio. If you’re selling investments during a downturn, those losses are not necessarily bad in the long term. You can use those losses to offset future gains. For example, if you bought something for $100 but it’s worth $90 today, you decide to sell and reallocate those funds. You’ve lost $10 in that investment, but you can recoup those losses if you sell against future gains. If you sell something that has a $10 profit, you no longer have a taxable event. It is critical in times of downturn to reevaluate where you are and see if any action can be taken to strengthen your portfolio. This should be seen as an opportunity and not a loss. 


Roth Conversions

Whenever you have the opportunity to invest in a Roth IRA account, do it. You will grow your money tax-free and never have to pay a single dollar in tax on the growth of your investments ever again. During a down market, convert the money you have accumulated in IRAs to a Roth. You will have to pay taxes when you convert the dollars to the Roth IRA, similar to ordinary income tax, but your tax rates will be lower because your investments are down. 

When you convert during a down market, you maintain the same investments and allocation to stock markets. As the markets recover, your assets in the Roth IRA will grow tax-free.

For more of my conversation with Alex and Eric, watch our recording. We talk about specific scenarios related to portfolio rebalancing, loss harvesting and Roth IRA conversions. To connect with Alex Boeri and Eric Strong for financial advice you can find them at Miller Avenue Advisors

If you have any questions about the real estate market contact us anytime. I would love the opportunity to help you or someone you know buy or sell a home. 

September 12, 2022
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