The stock market is down more than 10% year-to-date. This meets the definition of a stock market “correction.” A correction happens about every 1.6 years. So it is a pretty common event.
When the stock market is down more than 20%, it is called a “bear market.” That happens about every four years. So get used to it. You’ll experience these events many more times in your lifetime.
We’re frequently asked when a good time to invest is? The answer is when you have available cash.
Although it is not a smooth ride, the stock market is always trending upward. So your cash invested today has excellent odds of being worth more ten years from now.
A downturn in the stock market is a great time to consider investing more of your cash.
CRE brokers should have diversified investments outside of real estate, now is an excellent time to reevaluate what financial accounts you are using and can contribute to.
Because most CRE brokers are independent contractors, they’ll have the option of opening a 401(k) plan for their business. This year’s 401(k) employee deferral limit is $20,500. If you’re age 50 or older, you can add $6,500 of catch-up contribution as well. Your business can also contribute a profit sharing contribution of 25% of W-2 wages, up to $40,500.
No matter your income, there is a method for contributing to a Roth IRA. This year’s contribution limit is $6,000 or $7,000 if age 50 or older.
Since you’re in control of the health insurance plan you have, you can choose one eligible for a Health Savings Account. This year’s family plan contribution to an HSA is $7,300 or $3,650 with an individual plan. In addition, you can add a $1,000 catch-up contribution if you are age 55 or older.
If you are married, your spouse will have the same Roth IRA and 401(k) contribution opportunities, depending on W-2 wages paid by your business.
So, for the married 55-year-old, we’ve laid out contribution opportunities of nearly $125,000. For a single 25-year-old, these contributions are almost $71,000.
If you can contribute more than these amounts, then a Defined Benefit Plan can be considered an add-on to your 401(k). Contribution ranges with this plan vary and are primarily based on age.
All of these accounts should be part of your overall investment strategy. They will complement your real estate investments and provide much better liquidity.
These contributions are available every year. A temporary downturn in the stock market is an excellent time to consider making your annual contributions.
