The Cash Flow Clock: For Retirees - Book - Page 74
The Cash Flow Clock
it was down to right around 2200, a drop of 35%.
From an investment standpoint, this was a terrible
day. We may have had $100,000 in our IRA account.
Now we only had $65,000. The world was shutting
down. No one knew what the future would hold.
From a tax perspective, this was an opportunity. We
had $100,000 in an IRA that was going to be taxed at
some point. Now we only had $65,000 that needed
to be taxed. If we had converted our IRA to a Roth
on March 23, 2020, we would likely have paid 35%
less tax than we would have just a few weeks prior.
As the market rebounded back to where it had been
over the course of the next 5 months (a 55% gain) it
would all be tax free. Any growth in the market ever
since (an additional 67% as of writing) would also be
tax free.
It is easy to look back and see what we could have
done or what we should have done. The only real
benefit in doing so is in what we can learn and apply
to our current, and future, circumstances to do things
more efficiently. It would be great if the market were
always up and if there were never any market
corrections. But the reality is that there will always
be downturns in the market. The key is to be aware
of opportunities to take advantage of these market
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