Ask an Expert: How to Handle Your Money in This Crisis, According to a Wealth Advisor
We’ve been spending a lot of time at Create & Cultivate HQ discussing how we can best show up for and support our community during this uncertain time. Community is at our core, and connecting with others through one-of-a-kind experiences is what we love to do. While the world has changed, our mission has not. We’re committed to helping women create and cultivate the career of their dreams, which is why we’re proud to announce our new Ask an Expert series. We’re hosting discussions with experts, mentors, and influencers daily at 9 am, 12 pm, and 3 pm PST on Instagram Live to cure your craving for community and bring you the expert advice you’ve come to know and love from C&C. Follow Create & Cultivate on Instagram, check out our Ask an Expert highlight reel for the latest schedule, and hit the countdown to get a reminder so you don’t miss out!
Photo: Courtesy of Roxana Maddahi
With money anxiety at an all-time high in the midst of the COVID-19 crisis, one thing is certain (despite the volatile state of the markets): We need to close the financial literacy gap for women. According to the 2019 Women, Money, and Power Study, commissioned by Allianz Life Insurance Company, 57% of women wish they were more confident in their financial decision making.
Enter Roxana Maddahi, a wealth advisor at Steel Peak Wealth Management who’s passionate about helping women take the lead in financial planning and helping us realize that it’s not as intimidating as it may seem. In this installment of our Instagram Live Ask an Expert series, we tapped Maddahi to weigh in on how we should be handling our money during COVID-19.
Scroll on for some highlights from the conversation and be sure to follow Create & Cultivate on Instagram to tune into the next one.
Q: I’m currently experiencing a lot of anxiety around money during COVID 19. What can I do to ease my concerns?
A: It’s normal to have anxiety around money right now—26 million people have lost their jobs, most businesses have slowed down, and we have no idea when this will all end.
My advice is: Get involved with your money. Get online access to your bank accounts, your retirement funds, your student loan providers—and talk to the people that help handle your money.
Call your CPA and tell them that you want to be involved and a part of the conversation. Call your financial advisor and let them know what you need, what your goals are, and what your desires are. Don’t be scared, don’t be nervous. There’s no harm in being aggressive and making sure that you’re part of the conversation.
The best way to ease our fears and anxiety about money is to get involved. Ask questions. Know what you’re dealing with.
Q: I’m not invested, where do I start? Is now a good time to be making investments anyway?
A: I do think it is the right time to invest if you’re not invested already. If you want to invest in the stock market, you want to have a timeline of at least five years because markets tend to go up and down and you want to allow for time if there is a pullback (like we’ve seen recently, for example.)
The great thing about investing that’s happened in recent years is that there are very few barriers to getting invested in quality investments. Exchange Traded Funds (ETFs) allow you to invest in a theme of stocks, making it easy to diversify your overall portfolio. I personally invest my own assets in ETFs because they tend to be less volatile.
Q: What about other future planning like retirement and education savings?
A: It’s a great time to explore what your options are if you’re looking ahead to retirement or starting to save for your kid’s education.
For saving for retirement, make sure you’re looking at a qualified retirement plan—a 401k, IRA, a SepIRA. The benefit is that they allow you to put money away before tax, so it’s subtracted from your taxable income. The money that you can put in it now, the more that it will grow and that can be very powerful.
For saving for a kid’s education, I like the 529 plans. They’re easy and accessible and allow you to grow your money without paying taxes on it. You’re able to invest your money, let it grow, and then not pay capital gains tax on it.
The caveat with the 529 plans are that they can only be used for education—for college tuition, books, room and board, and now even private school. If you use them for anything else (say, your kid decides not to go to college), then you have to pay a 10% penalty plus tax if you don’t use this money for education.
Q: Where is the most important area for small business owners to focus their financial energy right now and why?
A: Continue to invest in your employees. If you haven’t already, I would take advantage of the Paycheck Protection Program (PPP) to continue to pay your employees.
Everyone who owns a small business knows how difficult it is to hire people, to train people, and to have a group of people that works well together. If you can’t afford to pay your employees full salaries, think about what you can do to keep them onboard until we see that rebound.
You want to be able to crush it after this is all over, so I highly recommend investing as much as you can in your employees and doing all you can to keep them motivated and going during this process.
About the Expert: Roxana Maddahi is a wealth advisor at Steel Peak Wealth Management. She helps millennials plan their financial lives and invest for their futures. She’s on a mission to help women take the lead in financial planning and realize that it’s not as intimidating as it seems.