The financial impacts of 2020 events?

[Glockster]

How long do you guys think it’ll take to see the financial impacts of the events that took place this year.
I know the stock market is not totally tied to the overall economic well-being of the nation but it just seems to completely ignore a lot of the numbers and projections coming out.

 

[Trial153]

There is huge disconnect between Main Street and Wall Street. No question in my mind that this situation will expand on the current divide

 

[ShootsManyBullets]

Inflation is coming.
Only 2 realistic options - Massive inflation to devalue the currency and make the debt cheap or just say FU and not pay it. Neither is good.

Killing the purchasing power of the dollar will be brutal. Not sure what happens to other fiat currencies as most of them can't be in any better shape than us.

I'm not an expert on stocks but I question how the market continues to rally when all of the earnings news is worse than we expected. If things continue to be bad even after we open back up what happens to share prices? Do we ever go back to looking at actual revenue and earnings when we value equities?

 

[matt0550]

I have considered...and ONLY considered dumping my entire IRA if the market hit 26000 - there is no 10% penalty right now for cutting and running before the age requirement. Take that money, divide it in half after paying my taxes on it. One half secured in a low yield (currently 2.25%) savings with a local FDIC bank's the other half for the purchase of land. I am almost (almost) at the point where I feel it will be better to have "things" than money as the dollar becomes stripped of its value through one route or the other. Minus the fact that so many heavy investors are now looking for a jumping off point and securing cash. Many guys I speak with (doesnt mean they know what they are talking about) have lamented about the rebound followed by a long slow crumble. I dont want to be stuck with an entirely devalued IRA and nothing in my hands if the dollar becomes $.50. What do you do? Maybe all of what I just said is nothing more than severe overreaction - I wish that to be true, someone please tell me it IS.

 

[Glockster]

I know my question is extremely broad. What got me thinking about this is my Wyoming apps this year and how this could affect everyone’s budget. Which could effect applying for tags and hunting budgets.
If that’s not enough of a rabbit hole, I then jumped in head first to the grand scheme of things housing, retirements, small businesses, etc.
It’s too big for me to wrap my head around. So I was just curious what others thought.

Not to make light of the situation but this meme always makes me think if the United States was a person this is what would be going through it their mind right now.

 

[homers]

I have considered...and ONLY considered dumping my entire IRA if the market hit 26000 - there is no 10% penalty right now for cutting and running before the age requirement. Take that money, divide it in half after paying my taxes on it. One half secured in a low yield (currently 2.25%) savings with a local FDIC bank's the other half for the purchase of land. I am almost (almost) at the point where I feel it will be better to have "things" than money as the dollar becomes stripped of its value through one route or the other. Minus the fact that so many heavy investors are now looking for a jumping off point and securing cash. Many guys I speak with (doesnt mean they know what they are talking about) have lamented about the rebound followed by a long slow crumble. I dont want to be stuck with an entirely devalued IRA and nothing in my hands if the dollar becomes $.50. What do you do? Maybe all of what I just said is nothing more than severe overreaction - I wish that to be true, someone please tell me it IS.

I'm no financial advisor but I think it's a mistake to take the money out of an IRA, 401K and pay taxes on it. Why not just move the money within the IRA or 401K out of equities and into a lower risk option, like a federal money market account? That way you still have the money in your IRA without paying taxes (now).

 

[dgc1963]

IMO the impact is going to be a lot more than expected when thngs open up I dont see businesses bringing everyone back at first prob at a slower pace untill things are running again im not a glass half full guy but I think things are going to be a bit messed up all summer I hope im wrong

 

[VikingsGuy]

I have considered...and ONLY considered dumping my entire IRA if the market hit 26000 - there is no 10% penalty right now for cutting and running before the age requirement. Take that money, divide it in half after paying my taxes on it. One half secured in a low yield (currently 2.25%) savings with a local FDIC bank's the other half for the purchase of land. I am almost (almost) at the point where I feel it will be better to have "things" than money as the dollar becomes stripped of its value through one route or the other. Minus the fact that so many heavy investors are now looking for a jumping off point and securing cash. Many guys I speak with (doesnt mean they know what they are talking about) have lamented about the rebound followed by a long slow crumble. I dont want to be stuck with an entirely devalued IRA and nothing in my hands if the dollar becomes $.50. What do you do? Maybe all of what I just said is nothing more than severe overreaction - I wish that to be true, someone please tell me it IS.

I am not an investment advisor so take the following with several grains of salt.

If you fear high inflation (i.e., erosion of the dollar), why would you put half your funds in a 2.25% bearing account? If you want safe you would move funds within 401k into a US inflation protected treasuries; or if you have a longer timeframe and can take some additional risk you would hold a mix of equities which have far out performed inflation over time.

Also, if you can find viable risk appropriate options within your 401k move funds there, don't take funds out and thereby take the full income tax reduction now and then re-invest post tax net funds. Even if 10% penalty is avoided you still lose the growth value of the funds you paid regular income tax on now.

 

[matt0550]

I'm no financial advisor but I think it's a mistake to take the money out of an IRA, 401K and pay taxes on it. Why not just move the money within the IRA or 401K out of equities and into a lower risk option, like a federal money market account? That way you still have the money in your IRA without paying taxes (now).

That is absolutely my tradition line of thinking - i guess I'm looking at the purchase of land (meaningful land purchase that could be homesteaded) as a way to end up with something rather than half the value of what i currently own. I will pay taxes at one point or another on every dollar in that account and IF the dollar becomes heavily devalued I lose on top of loss. Land is in the category of "they're not making any more of it" and I suppose that's why i see it as an attractive shelter. And then there is the other side of this - while I have a pension that I have paid into for an entire career, there is absolutely no guarantee that it survives and the rug isn't somehow pulled from underneath me at some point. A conundrum. You are absolutely correct in that it has long been held an utter mistake to withdraw from a savings program no matter the conditions (minus the very grave) - this situation has me pondering IF this situation is just that.

 

[matt0550]

I am not an investment advisor so take the following with several grains of salt.

If you fear high inflation (i.e., erosion of the dollar), why would you put half your funds in a 2.25% bearing account? If you want safe you would move funds within 401k into a US inflation protected treasuries; or if you have a longer timeframe and can take some additional risk you would hold a mix of equities which have far out performed inflation over time.

Also, if you can find viable risk appropriate options within your 401k move funds there, don't take funds out and thereby take the full income tax reduction now and then re-invest post tax net funds. Even if 10% penalty is avoided you still lose the growth value of the funds you paid regular income tax on now.

I think my knee jerk reaction (which is what all of this is) was to have that cash on hand and ready should I need it immediately for purchase power - in hind site, it would still be accessible in the same or similar time frame should i need to press it into service. You are correct, there are viable risk appropriate options within my program for certain - that's a wiser move. I'm still shell shocked when i read the expression of others who stand to lose much more than i because they have way more skin in the game and its frightening to watch.

 

[Deleted member 38069]

Great idea! Let's try this topic again when we were clearly advised not to!

 

[VikingsGuy]

That is absolutely my tradition line of thinking - i guess I'm looking at the purchase of land (meaningful land purchase that could be homesteaded) as a way to end up with something rather than half the value of what i currently own. I will pay taxes at one point or another on every dollar in that account and IF the dollar becomes heavily devalued I lose on top of loss. Land is in the category of "they're not making any more of it" and I suppose that's why i see it as an attractive shelter. And then there is the other side of this - while I have a pension that I have paid into for an entire career, there is absolutely no guarantee that it survives and the rug isn't somehow pulled from underneath me at some point. A conundrum. You are absolutely correct in that it has long been held an utter mistake to withdraw from a savings program no matter the conditions (minus the very grave) - this situation has me pondering IF this situation is just that.

Don't forget that in a tax deferred account you get to keep the gains as income from the portion of your investment that would have otherwise conveyed to the government now as taxable income. This is a huge part of the growth value of this type of investment.

Also, if you are worried about inflation reducing the value of the dollar there are US treasuries that cover this risk by guaranteeing against inflation. And securities typically beat inflation over most mid and long term windows.

Third, real estate can be a good investment but can also be a bad investment. During a tough economic window spending on housing, business square footage and secondary homes/vacation properties drop.

In the end what you want is a well blended mix of investments that match your risk appetite and match the time horizon of your planned retirement start and duration. Half in a 2% saving account and half in real estate on the eve of an economic downturn after property run up in many parts of the west would not be considered well balanced in my non-professional opinion. YMMV.

 

[matt0550]

Great idea! Let's try this topic again when we were clearly advised not to!

I was unaware..i'm out then.

Don't forget that in a tax deferred account you get to keep the gains as income from the portion of your investment that would have otherwise conveyed to the government now as taxable income. This is a huge part of the growth value of this type of investment.

Also, if you are worried about inflation reducing the value of the dollar there are US treasuries that cover this risk by guaranteeing against inflation. And securities typically beat inflation over most mid and long term windows.

Third, real estate can be a good investment but can also be a bad investment. During a tough economic window spending on housing, business square footage and secondary homes/vacation properties drop.

In the end what you want is a well blended mix of investments that match your risk appetite and match the time horizon of your planned retirement start and duration. Half in a 2% saving account and half in real estate on the eve of an economic downturn after property run up in many parts of the west would not be considered well balanced in my non-professional opinion. YMMV.

This is exactly what i was hoping to read having said that i hope this is nothing more than severe overreaction on my part.

 

[VikingsGuy]

Great idea! Let's try this topic again when we were clearly advised not to!

Read literally you are correct, but as I read he was not entirely shutting down all non conservation and hunting discussion. He didn't close the many sections on this Forum that relate to other topics as he easily could have. I don't think he is going to block questions about target shooting rifles, where to get a good pizza in Salt Lake City, and he isn't going to shut down the prayer requests, etc etc. I think the broader point wass no pissing matches over politics or corona. I viewed OPs question as a fair. We will see if it stays ok, but if folks offer useful advice in an empathetic matter I would guess we are not offending BigFin or MrsBigFin. I stand to be corrected if I am off.

 

[Glockster]

Great idea! Let's try this topic again when we were clearly advised not to!

This is the money and finances portion of the forum, correct? That is all I was thinking about, was discussing that. Don’t wanna piss anybody off, but good lord guys. If we can’t discuss money and finances in the subforum money and finances then why have a subforum. Anyway there are other issues then Covid effecting the U.S. economy. How about oil prices or the disconnect between Wall Street and Main st.

 

[Deleted member 38069]

This is the money and finances portion of the forum, correct? That is all I was thinking about, was discussing that. Don’t wanna piss anybody off. If we can’t discuss money and finances in the subforum money and finances then we have a forum.

The last several threads were locked because it got ugly. Big Fin posted a How to act thread, warning us of this. It's a Hunting forum, I'd treat it as such. But thats me.

 

[shb]

 

[Treeshark]

I’ve considered the land angle as well, and what scares away me are the following factors (all downward forces):

-Rising interest rates, lowers resale value
-Reduced crop demand/prices, lowers resale value
-Increased inflation, lowers resale value
-Decreased building, lowers resale value
-Reduction in expendable income/lowers recreational demand, lowers resale value

Considering these things, it doesn’t feel like a safe hold-of-value right now to me.

 

[Glockster]

The last several threads were locked because it got ugly. Big Fin posted a How to act thread, warning us of this. It's a Hunting forum, I'd treat it as such. But thats me.

Fair enough. Not trying to rile anybody up or to stir the pot.

 

[Deleted member 38069]

Fair enough. Not trying to rile anybody up or to stir the pot.

Nobody is riled up. Just forewarning you.

Read this and behave accordingly

Some of you might see my account logged in here most hours of the day and be given the impression I spend tons of time on Hunt Talk. This time of year, it is usually not me. It is often Mrs. Fin monitoring things under my account. I have other jobs and responsibilities that require most all...

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