What is a Financial Plan? (Facebook Live, May 26 2021)

[@smd3697]

You mentioned if / when the market drops it’s a good time to do ROTH conversions. Could you’ll help me understand this better...what are the reasons this is so? Thanks

[@RetirementPlanningEducation]

The assumption is you'd be buying and putting the more aggressive assets in your Roth, to try to maximize how much growth you ultimately get in there over the long-term. If you plan on converting a certain amount of dollars during the year, it would better to convert when securities prices are depressed and down. That way, you're able to buy more of the securities at reduced prices. So that when the rebound eventually happens, all of that rebound and growth is now in your Roth account. For example, assume you plan on converting $100k during the year. And for the fund or shares you want to buy, it's currently $100 per share. Which means you'd be able to buy 1k of shares now. But if the market drops 20%, those shares now cost only $80 per share. Which means that same $100k conversion would now buy you 1.25k shares instead of just 1k like before. And then when the share price eventually rebounds back to $100 per share, that $20 per share of gain will have happened inside your Roth where it will eventually all be tax-free. Versus if you didn't do conversion and instead held that investment in your tax-deferred account, that $20 per share rebound would have happened inside the tax-deferred account and that rebound/gain will all be fully taxable whenever you eventually distribute out the money. Or here's a more extreme example; assume you have $100k in your tax-deferred account and you plan on converting $50k this year. If the share prices don't move, you can convert $50k to your Roth, and still have $50k left in your tax-deferred account. Or, if the market drops 50% and your tax-deferred account decreases to $50k in value, you then can convert ALL of it to your Roth. So now you no longer have any tax-deferred money; it's all in your Roth. And the eventual rebound will happen inside your Roth.

[@smd3697]

@@RetirementPlanningEducation WOW! Thanks for taking the time to return such a thorough explanation. It makes perfect sense, I just didn't see it before. Thanks again.

[@armueller2001]

Fantastic, thank you Andy

[@bernardflorento927]

Do you do one-time financial planning services, i.e. just for the deliverable financial plan and if so where can I find your fee for this?

[@RetirementPlanningEducation]

Hi. I don't offer one-time plans or other limited engagements. But Cody Garrett of www.measuretwicefinancial.com does. He's definitely worth reaching out to!