MYRTLE BEACH — Jeremy Finger remembers how he felt in 2008 when the bottom fell out of the housing market and there was uncertainty in the economy.
In fact, he chronicled it in 2009 — the good, the bad and the ugly — and he reflected on his emotions. The owner and financial advisor at Riverbend Wealth Management in Myrtle Beach suggests people “take stock on what they’ve learned and learn from the mistakes they made.”
“Look back on some of the wins they had and some of the mistakes they made, and right now what emotions they felt at that point in time,” Finger said. “In 2008, 2009, I wanted to have a list of things to reflect back on so that if I ever go through that thing again, that can be a guiding list of rules for me in a time of high uncertainty.”
A weakened workforce in 2020 coupled with a party change in the White House and Congress leads to uncertainty in the 2021 market.
“Whenever there is a maximum amount of uncertainty, there’s more amount of opportunity,” Finger said. “There’s no real correlation, at least in my opinion, on being able to make blanket decisions on investments due to the time of year, elections, no elections or whatever. There are so many factors at play.”
Jason Johnson, a financial advisor for Edward Jones in Georgetown, agreed and said the market is not too concerned with “who has the keys to the White House.”
“In 2021, I’m not looking at who’s president, but a few things that I do look at is where interest rates are, and I look at consumer spending,” Johnson said. “We look at a lot of different variables there. When we look at interest rates, at this point, interest rates are at historic lows, which is typically good for corporations and typically good for individuals because, at the end of the day, the cost of their debt actually goes down.
“The other main driver is corporate profits. At the end of the day (in 2020), corporate profits have been affected greatly because of the slow down due to COVID. We’re pretty convinced that we’re going to come out of this and COVID will subside. And when that happens, we do expect spending to increase and we do expect the economy to get back on track, therefore boosting corporate profits. And anytime we have boosting corporate profits is typically good for the stock market.”
Finger said planning for 2021 depends on where people are at in their lives.
“A millennial may be a little bit more for taking a raise so they may add more to their 401K,” he said. “For someone who is getting close to retirement, I’m going to make an extra payment to pay down my house. For someone who is in retirement, they may listen to a financial webinar once a month. One small thing that they can do that’s tangible and specific that they can do in 2021.”
Finger said it is important not to make any major moves during uncertain times. He said he had a client prior to November who had part of his portfolio with another advisor and the rest with Finger. The client sold out his portfolio with the other advisor and it turns out he would have received a great return.
“That one mistake cost him well over $100,000 — just for a month,” Finger said. “His intention was to save a half a percent on a fee. What ended up happening is that half a percent cost him 10 to 12 percent.”
Finger said it’s also important to prioritize financial responsibilities when planning for the year. For example, a person needs to take care of things like credit card debt before making additions to their portfolios.
“Someone may think they need advice when buying stock while they have 20 percent credit card debt on the other side,” he said. “You can have the best investment in the world, but if you’re losing 20 percent over here, that’s the easiest thing to do is to get rid of the debt.”
Finger said to really know what is best for an individual, people should sit down with someone who looks at their overall financial picture.
He said people should continue to save between three and 18 months of expenses in emergency funds in the event something like 2020 ever happens again.
“When things are turbulent, you’ve got a bit of a cushion there to accept some of the bumps, some of the choppy waters that may lay ahead,” Finger said. “When you’ve got emergency funds, that gives people confidence and security to stay the course. But if everybody is fully invested, up to the hilt and they spend every dime, it’s too risky. Because one little blip and you’re tossed overboard.”